SME energy is being sapped by the energy market - Business Works
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SME energy is being sapped by the energy market

by Christian Nellemann, CEO, XLN Telecom Rising energy costs are a recurring and contentious issue: for both consumers and businesses alike, says Christian Nellmann, CEO of XLN Telecom. A survey carried out by my company has found that for 40% of small businesses, energy bills are their biggest overhead. This is a huge percentage of businesses that are forced to shell out millions of pounds to the energy companies to stay running, and frankly, it needs to change.

It was recently announced the 'Big 6' energy companies are to face a competition enquiry. And on this year's budget list, past the cuts for beer and bingo, Chancellor George Osborne is promising £7bn in measures to cut energy costs for UK manufacturers. This is expected to save medium-sized manufacturers up to £50,000 on their annual energy bill, but is this enough to bring energy costs down for good?

It concerns me that almost half of small businesses in the UK have to deal with these costs and I imagine it would also concern many, if not all, of the UK's five million small business owners. Moreover, whilst it is promising that the government is taking steps to help relieve the burden of rising energy costs on small businesses, I feel there are still issues that need to be addressed.

300,000 businesses are owed a total of £204 million

Let's go back to January of this year [2014] when a report from Ofgem revealed that up to 300,000 businesses across the UK are owed in total £204 million from the 'Big 6' energy companies (British Gas, SSE, npower, Scottish Power, EDF Energy and E.On) from money left over in closed accounts. As these statistics from Ofgem show, the onus is on the customer to chase the money they are owed, rather than the supplier!

I find it highly unjust that these energy giants have pocketed this excess cash owed to small businesses they are the backbone of the UK economy and the lifeblood of our economic recovery.

There's been a lot of debate in recent years on the power if you'll pardon the pun the 'Big 6' have over the energy market. These companies share over 90% of the UK's domestic customers and this has received a lot of criticism recently. It's resulted in the energy secretary's letter to regulators questioning British Gas' profit margins and opposition leader Ed Miliband's pledging to break up their stranglehold over the energy market if Labour were to win the next election. Even the regulator charged with overseeing the 'Big 6', Ofgem, is under scrutiny, with some senior ministers reporting that it's currently in the last chance saloon and needs to take action to control this situation.

Whilst this £7bn investment to help Britain's struggling manufacturing sector is certainly welcome, the issue of energy costs seems a long way from being resolved. I look forward to seeing how things develop in the run up to next year's general election.

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