Small businesses face sky high standing charges

Article posted

8th May 2024

Read time

2-4 min read


Mollie Pinnington

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The Federation of Small Businesses (FSB) is urging energy regulator Ofgem to intervene in the rising cost of standing charges for small businesses. These fixed daily fees, regardless of energy use, have seen dramatic increases in recent months, threatening the viability of many firms.

In a letter to Ofgem's CEO, the FSB highlights the "specific, negative impact standing charges are having on small firms," many of whom have witnessed their daily rates skyrocket. One example cited involved a business experiencing a staggering 13-fold increase in its standing charge, from 70p per day in July 2021 to over £9.69 in September 2023.

The FSB argues that small businesses, unlike domestic consumers, lack the protection of the energy price cap. This leaves them exposed to significant price hikes, which disproportionately affect businesses in rural areas. The FSB emphasises that these rising costs exacerbate the existing rural-urban divide and hinder efforts to "level up" more remote parts of the UK.

The organisation is calling for Ofgem to take several steps:

  • Investigate the impact of high standing charges on small businesses.
  • Ensure greater transparency in energy pricing for small business customers.
  • Determine if energy companies are behaving fairly towards small firms.

Tina McKenzie, Policy Chair at the FSB, emphasises the urgency of the situation. "Small business energy customers behave more akin to consumers than big businesses," she states. "They lack the resources, expertise, and buying power to negotiate the best deals."

The FSB's plea comes amidst a wider economic hardship for small businesses. Rising energy costs coupled with other financial pressures threaten the survival of many firms. Ofgem is under increasing pressure to address the issue and ensure a fair energy market for all customers.


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