Brighton MP Caroline Lucas will present a Bill in the House of Commons today to try to stop big energy companies from making it difficult for micro businesses to switch onto cheaper energy tariffs.

The Micro Business and Energy Contract Rollover Bill, backed by the Federation of Small Businesses (FSB), aims to tackle the practice by energy companies of rolling over contracts and locking small firms into un-negotiated and often more expensive terms for a full 12 months.

If passed, it would limit this to 30 days, helping to deliver a fairer energy market for micro businesses.

FSB research has found that one in four small firms had been rolled over without their knowledge and an overwhelming 82 per cent of respondents said they would support the abolition of rollovers.

Caroline Lucas, MP for Brighton Pavilion, said:

"With the rising cost of energy now a make or break issue for many small firms, it’s time to hold the energy giants to account for the damaging practice of contract rollovers that delivers a bad deal for micro businesses.

"It’s deeply unfair that, while micro businesses often consume products and services in a similar way to domestic consumers, they do not enjoy the same level of regulatory protection.

"This leaves them vulnerable to being ‘rolled over’ from their current energy contract into a new one without their knowledge – making it impossible for them to negotiate a better deal for another 12 months.

"Back in 2009, Ofgem gave indications that it would tackle the issue of rollovers once and for all, but caved in to pressure from the big energy lobby at the last minute.

"My Private Member’s Bill is about asking the government to act to ensure the energy regulator finally delivers on its promise – and stands up for the UK’s micro businesses."

Trevor Freeman, FSB Chairman, Brighton and Hove branch, said:

"Our local micro firms – those with fewer than 10 employees – will likely not have staff time to check these contracts and so are vulnerable to sharp practice of this sort.

"The FSB believes these roll over terms are being used to unfairly lock micro businesses into unfair contracts – a ruse for larger utility companies to enrich themselves. 

"Small firms should have the right to re-negotiate terms fairly and, if they wish, find a better supplier to suit their needs. 

"In the current economic climate, small firms especially need to have the opportunity to reduce their costs to survive.

"It’s something which Government must tackle and Ofgem should step in upon and regulate – we will be looking for a firm assurance from the minister on Friday that this will be the case."

The Association of Convenience Stores is also backing the Bill.

ACS Chief Executive James Lowman said:

"Rollover contracts are a significant problem for small businesses who are frequently and unwittingly tied into unfair terms and inflated prices.

"This Bill highlights the need for change in the energy market, and we need these protections to be introduced and extended to all small businesses."

ENDS

Notes to editors

1) The Private Member’s Bill can be found here: http://services.parliament.uk/bills/2012-13/microbusinessesandenergycontractrollover.html

2) The FSB is the UK's leading business organisation with around 200,000 members. It exists to protect and promote the interests of the UK’s Real-Life Entrepreneurswho run their own business. More information is available at www.fsb.org.uk

3) ACS (Association of Convenience Stores) is the voice of local shops, representing over 33,500 convenience stores. ACS helps local shops thrive through lobbying, support and networking opportunities.