- FSB claims that suppliers have increased fixed costs for small businesses
- A small business pays almost £10 per day in fixed costs
- Have your fixed costs increased? Contact: editor@thisismoney.co.uk
According to the trade association, small businesses are confronted with crippling increases in fixed costs on their energy bills.
The Federation of Small Businesses (FSB) claimed that some suppliers were increasing fixed charges ‘as a way of driving up bills for small businesses’.
Fixed costs are a fixed amount that is paid regardless of how much energy you use to help cover operational costs.
Small businesses have accused suppliers of increasing fixed charges on their energy bills
They have come under increased scrutiny due to rising costs and customers’ inability to lower the price of their bills.
The energy regulator Ofgem opened a consultation on fixed charges at the end of last year and asked households and companies for their opinion on the rates.
An average household pays 53 cents per day for electricity and 30 cents per day for gas, which is currently capped, but businesses are facing much steeper prices.
The FSB has identified complaints from its members about huge increases in fixed compensation, with no means to change the ‘stealth charges’ that are driving up their bills.
A car parts company in Dorset that was paying 70p fixed costs per day in July 2021 has increased its fixed costs twelve times and now pays £9.69 per day.
Another company in the Highlands saw its fixed costs rise from 32p to £7.50, adding £2,500 to their annual bill.
It comes just days after FSB research showed that utilities were once again the most cited cause of rising cost pressures.
Martin McTague, national chairman of the FSB, said: ‘Energy suppliers have some explaining to do about the sudden and dramatic increases in fixed charges, which are becoming a regressive form of billing that is hampering the growth, confidence and investment of small businesses.
“Even as wholesale energy prices have fallen from the peak we saw in 2022, small businesses are still scrambling over skyrocketing bills.”
The lobby group is calling on suppliers to be more transparent about how they calculate fixed fees, and to reduce the gap between fees for businesses in rural and urban areas.
In addition to operational costs, fixed costs also include costs associated with the failure of energy suppliers and the acquisition of suppliers who take over bankrupt companies under the Supplier of Last Resort (SOLR) regime.
The FSB has called for these costs to be completely excluded because they “only directly benefit the profits of larger energy suppliers.”
McTague said: ‘Small businesses do not have the same protection as domestic customers when it comes to energy price increases. Companies’ energy bills could remain high if the fixed charge system remains as it is now.
‘A more transparent system of fixed rates is needed to ensure competition in the market and, most importantly, to help small business customers clearly understand what they are paying for.’
It comes just months after energy suppliers were accused of paying secret commissions to third-party energy brokers.
Last summer, law firm Harcus Parker launched a £2 billion claim against energy companies, claiming that businesses and other organisations, including care homes and charities, had unknowingly paid the price for energy when prices soared.