Small businesses seek help with standing charges

Article posted

29th Jan 2024

Read time

2-4 min read


Mollie Pinnington

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Across the UK, many small businesses panicked due to the rise in standing charges. In response to this growing outcry, Ofgem, the energy regulator, has launched a consultation into standing charges, offering a glimmer of hope for struggling businesses.

The Federation of Small Businesses (FSB) reports that over 57% of members see utilities as a major cost driver, with standing charges a specific point of pain. One garden center owner reported an eye-watering £1.20 daily standing charge, a figure unthinkable just a year ago.

The reasons behind the surge are complex. Global energy market volatility, has pushed up wholesale costs. Suppliers, looking to recoup losses, have shifted some of the burden onto standing charges, effectively creating a backdoor price hike.

This disproportionately impacts small businesses, many of whom operate on tight margins and have limited power to negotiate better deals. The Ofgem consultation, while a welcome step, is far from a guaranteed solution. Options on the table include introducing consumption-based standing charges, adjusting the price cap mechanism, or even exploring alternative funding models for network costs.

However, finding a solution that balances fairness with the need for a resilient energy grid will be a delicate dance. Small businesses, understandably, are urging immediate action. The FSB is calling for a freeze on standing charges during the winter months, offering some much-needed breathing room while long-term solutions are debated.

The issue of rising standing charges is not just about bottom lines; it's about the very heartbeat of our communities. Small businesses are the lifeblood of local economies, providing jobs, supporting local producers, and fostering a sense of place. Crushing them under a mountain of unfair charges threatens not just their survival, but the fabric of our towns and villages.

Ofgem's consultation is a crucial step, but it must lead to concrete action. Small businesses need a lifeline, not just a listening ear. The future of countless livelihoods, and the character of our communities, hangs in the balance. It's time for policymakers to listen to the cries of "unfair!" and deliver a solution that truly levels the playing field for the engines of our local economies.

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