‘Hidden fees’ add £100m to business energy bills

With energy regulator Ofgem set to provide a review of policy tomorrow (13 May), one of the UK's biggest energy buyers is calling for an end to businesses being 'kept in the dark' on up to £100m-worth of hidden fees.

Utilyx, which buys 10.5% of business energy in the UK on behalf of the country’s biggest retailers, banks and leisure providers, believes complete transparency is needed on the fees brokers earn for arranging energy deals.

“We believe it is time customers got full transparency on exactly what fees are being paid for the energy deals they are signing up to,” said Utilyx’s managing director Jo Butlin. “Together with direct regulation of brokers, that is the best way to improve the market, drive more competition and ultimately ensure customers are getting the best possible deal on their energy.”

The Energy and Climate Change Committee will take evidence on Ofgem review of policy on Tuesday morning. Ofgem is set to introduce a Code of Practice for Third Party Intermediaries (TPIs). Currently, approximately 350 TPIs buy 75% of the energy used by UK businesses, at a total cost of over £15bn.

In its response to Ofgem’s consultation on the issue, Utilyx argues that ‘hidden charges’ could potentially amount to as much as 0.5% to 1% of the average energy bill, costing UK businesses as much as £100m per year.

Stringent penalties

Unless TPIs are able to demonstrate they have carried out a comprehensive market comparison and presented a range of offers to customers, any commission paid to them by suppliers should be revealed, the firm says. It also believes direct regulation of the sector with stringent penalties for bad behaviour is vital to protect customers. 

“Most energy brokers play a very valuable role in helping businesses get the best deal in the market and to maintain competitiveness,” added Butlin. “Businesses understand there is a cost involved in the work carried out by brokers but commissions are often included in the price the customer pays and paid to the intermediary by the supplier without the customer’s knowledge. Often this may be in addition to what the customer is already paying the intermediary.”

Under Ofgem’s current proposals, customers will be able to ask for a breakdown of fees and charges involved, but that would only be on request rather than being automatically provided.

Utilyx, which is one of just a handful of energy consultancies who are regulated by the Financial Conduct Authority, believes direct regulation of TPIs is needed, a step further than the current proposal of a licence condition obliging suppliers to only work with TPIs accredited to the Code of Practice.

Luke Nicholls

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