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Ofgem challenged on hidden energy costs by UKHospitality

Published:  25 July, 2023

Leading associations including UKHospitality have signed an open letter challenging energy regulator Ofgem to take ‘immediate’ action on hidden charges by energy brokers.

The letter, organised by leading not-for-profit energy consultancy Box Power CIC, suggests businesses are being taken advantage of.

Eight leading groups: UKHospitality, Care England, the British Retail Consortium, the Federation of Independent Retailers, the Association of Convenience Stores, British Independent Retailers’ Association, the Independent Care Group and the National Council for Voluntary Organisations have voiced their concerns.

The key issue surrounds energy broker fees, and why they are transparent for some businesses but not others.

While legislation for greater transparency has already been introduced for very small businesses, who are known as micro-businesses, under Supplier Licence Conditions, Box Power CIC and the other signatories say the regulator has ‘abandoned’ other firms and organisations. 

The letter states: “We do not agree that larger businesses are able to look after their own interests, that just because this is a long-standing arrangement that it should continue or that Ofgem are best placed looking at issues affecting microbusinesses only.”

In one example gathered by Box Power, the energy consultancy found a commission fee of £12,000 had been easily applied to a £49,000 contract for one of 16 care homes operated by the provider for up to 1,200 patients in total. The signatories say this shows how unscrupulous brokers are taking advantage of businesses that can ill-afford it, which will be needlessly ramping up prices for customers in the process. 

Corin Dalby, CEO of Box Power CIC said: “For there to be trust, there must be transparency. They shouldn’t have to argue for support from the organisation created to protect all consumers. Rogue brokers are adding excessive commissions and all the while it is the end user who is paying for it. 

“Transparency should be a given, so whatever the level of commission the business is fully aware and in agreement. 

“Not only that, but now businesses are incurring even higher energy prices, some brokers are adding even higher fees because they think they can get away with it. This is an extra burden on businesses at exactly the point they can least afford it. We refuse to stand by and allow this to continue and will do all we can to ensure this is brought to a stop.”