Are you aware of the underhanded tactics business energy companies use to make a profit? Do you know what to look out for when shopping for a new energy provider? From hidden commissions to mis-sold contracts, it’s important to be aware of the dark secrets that business energy companies don’t want you to know. In this article, we’ll discuss these secrets and provide advice on how to protect yourself from being taken advantage of.
1. The truth about hidden commissions
Business energy companies often use hidden commissions to increase their profits. These commissions are often added to the cost of energy contracts, and they can add up quickly over time. In most cases, these commissions are even more than what the customer would pay if they simply purchased the energy from the supplier directly.
These hidden commissions also come with additional fees, such as administrative costs or late payment penalties. This means that customers can end up paying much more for their energy than they were expecting. It’s important for businesses to understand these hidden costs before signing any contracts, as they could end up costing them more money in the long run.
Additionally, business energy companies often use these commissions to reward sales representatives or brokers who help bring in new customers. This can create an incentive for sales representatives to try to get customers to sign long-term contracts or expensive packages, even if they don’t need them.
It’s important for businesses to understand how these commissions work and be aware of any hidden costs that may be associated with their energy contract. Doing research into different energy suppliers and speaking to an energy consultant can help businesses find the best energy deal for their needs, and avoid paying hidden commissions.
2. Mis-sold contracts
Business energy companies have been known to mis-sell contracts to unsuspecting customers, leading to unexpected charges and higher bills. This is usually done through a lack of transparency and by failing to disclose important information such as the full terms and conditions of the contract or the true cost of switching suppliers.
Brokers often renew customers with the same supplier, but unfortunately, this can result in the continuation of undisclosed or hidden costs. To avoid this, it’s important for customers to thoroughly review their contract and explore all options before committing to a renewal with the same supplier.
If you feel like you may have been mis-sold a business energy contract, it’s important to take action as soon as possible. Firstly, contact Business Energy Claims so we can review the terms and conditions of your contract to see if any changes were made without your knowledge. You can also contact your current provider and explain why you think you have been mis-sold a contract. They should then investigate and provide a response within 8 weeks. If you don’t receive a satisfactory response, you can take your complaint to an ombudsman service such as the Energy Ombudsman.
3. Failure to provide bill reliefs
Business energy companies have been accused of failing to pass on bill reliefs to their customers. This is when a customer is entitled to a reduced rate for their energy bills based on certain criteria, such as if they are a low-income household or are living with a disability.
In January 2023, EDF revealed that 2,000 business energy customers had not been granted the correct state-funded discount. They claim this was due to “system issues.” When energy companies fail to pass on these discounts, customers are charged more than they should be. This practice has been condemned by consumer advocacy groups, and many customers have filed complaints with energy regulators. It’s important to be aware of your rights and make sure that you’re receiving any bill reliefs to which you are entitled.
4. Failing to notify customers when contracts are about to expire
Business energy companies often fail to notify customers when their contracts are about to expire. This can leave customers in a vulnerable position, particularly if they are unaware of the expiration date of their contract. In 2014, Ofgem found that British Gas Business had incorrectly blocked businesses from switching and failed to give some businesses notice that their contract was due to end. In recognition of these failures, British Gas Business paid £5.6million in redress and penalty.
If a customer has not received an adequate warning of their contract’s impending expiration, they may find themselves unable to switch providers and face skyrocketing prices as their contract runs out. It is important for customers to be aware that business energy contracts do have an expiration date, and to make sure that they have received adequate warning of its approach.
It is also important for businesses to stay up-to-date on the terms and conditions of their business energy contracts. Companies should review these documents regularly to ensure that they are aware of any changes or updates that might affect their contracts. By understanding the terms of their contract, businesses can be better prepared for any potential expiration dates or other changes that could affect their energy bills.
By taking these steps, businesses can protect themselves from unexpected contract expirations and surprise bills. Business energy companies should also strive to provide clear and timely notifications when contracts are set to expire. By doing so, they can ensure that their customers are adequately informed and able to switch providers if necessary.
5. The real reason business energy prices keep going up
Business energy prices are constantly rising, yet the underlying cost of energy stays relatively stable. So why is it that business energy prices are increasing? The answer lies in the hidden costs of energy that most customers aren’t aware of.
Firstly, when business energy brokers add a commission, the supplier often adds their own commission which can be equal to the commission added by the broker. This markup on their costs can vary from supplier to supplier and is largely kept secret from customers.
Another reason behind rising prices is that suppliers often introduce costly schemes to encourage customers to switch to more expensive contracts. These are generally cleverly marketed as being more cost-effective in the long run, but this is rarely true and they are often more expensive than if you were to stick with your current contract.
Many energy suppliers also add a large fee for terminating a contract early. This fee can be quite substantial and is designed to lock customers into longer-term contracts. All of these hidden costs are not included in the advertised price of energy and add up to significantly higher costs for businesses over time.
Finally, non-commodity (wholesale) charges are having a significant impact on the energy market. Suppliers often pass these charges onto their clients, which can counteract any potential cost savings resulting from a softening of wholesale energy market prices. It’s important for clients to be aware of these charges and to factor them into their energy cost management strategy.
In short, business energy prices are going up because of the hidden costs and fees that customers are unaware of.
If you believe you were mis-sold business energy, get in touch with our expert team. Call us on 0800 689 4259, or email us at [email protected].