One of the UK’s largest energy providers has admitted it is failing to pass on emergency government help with bills to about 2,000 small businesses.
EDF admitted to The Times that “systems issues” meant that certain businesses had not received the correct state-funded discount.
Ofgem, the energy regulator, has been asked by the government to examine whether the industry is correctly passing on subsidies to small and medium-sized businesses.
The government’s Energy Bill Relief Scheme (EBRS), introduced last September, provides a discount on wholesale gas and electricity prices for all non-domestic consumers.
Suppliers are supposed to apply reductions automatically.
However, business owners told this newspaper that despite being eligible for deductions to their energy bills since October, they are yet to receive any relief.
EDF admitted that there was an issue but insisted that instances of overbilling were rare and a spokeswoman for the French-owned utility said: “Where this has happened, customers will be contacted and a new bill will be sent.
“Approximately 2,000 of our SME customers have been billed incorrectly. We have already reviewed these accounts, and we are aiming for all affected customers to have corrected bills issued by the end of next week.”
EDF said this amounted to less than 1 per cent of its SME customers.
Amid concerns that there may be similar issues at other energy suppliers, ministers have met industry executives to discuss the issue.
The Federation of Small Businesses has written to Grant Shapps, the business secretary, demanding that relief “arrives on time so that small firms can plan ahead, especially when they’re also up against inflation and other cost pressures”.
The level of the support is due to be drastically cut from April but this week, David Simmonds, a Conservative MP, warned the government that some small businesses had yet to see existing relief “reflected in their bills”.
Kevin Hollinrake, the small business minister, said in parliament this week that the government had asked Ofgem to examine the allegations.
Hollinrake also told MPs that energy suppliers had assured him and Graham Stuart, energy and climate minister, at a recent meeting that the support the government are providing is being passed on to SMEs.
Simon Delaney, the 57 year-old owner of the Firbank pub in Wythenshawe, Manchester, said EDF, his gas provider, is charging him 25 pence per kilowatt hour when it should be capped at 7.5p under the scheme.
“My concern is if they’re doing this to me, they’ll be doing it to other [business owners] who might not be as strong minded or as geeky as me. Most people in my industry don’t even know the unit rates.”
He is hoping that EDF will respond. “What I would expect is somebody will get back to me in 24 hours and say, ‘Don’t worry Mr Delaney, we’ve amended the rate and your discount’. But what will probably happen is I won’t hear from them for 28 days and in the meantime I’ll receive more incorrect bills.”
Annabel Lui, co-founder and chief executive of Cutter & Squidge, a London-based cake maker which had sales of £7.2 million last year, is also having problems with her energy supplier. She said her electricity bill at one site had increased from £3,000 a month to between £9,000 and £10,000, and that the relief had not been applied by SmartestEnergy, the provider. “We haven’t seen any reduction in our bills yet, and I’ve spoken to a lot of other businesses who haven’t either,” Lui, 36, said.
“I have spoken to my energy broker and understand that all my contracts are eligible and should be receiving [the discount]. I did the maths on the rules and we should be getting a 60 per cent reduction,” she added. Her chief financial officer is “hounding” SmartestEnergy, but said the situation is “not making much sense at the moment.”
Darren Jeffery, head of customer operations at SmartestEnergy Business, said: “In the scenario that a customer contacts us to query their applicability for an EBRS discount at one of their sites, we would work with them to check they qualify, applying and backdating any discounts owed.”
Sacha Lord, night-time economy adviser to Andy Burnham, the mayor of Manchester, said there was a significant issue and that it tends to be small and micro businesses that are not receiving the appropriate relief.
“The bigger chains, the ones that have the machine behind them, they’re getting the support. It’s the smaller family-run businesses that aren’t and they’re the ones that we’re going to see drop away.”
Ofgem said: “We are working with [the] government and stakeholders to determine if further action or assistance is needed to help businesses, in addition to looking at compliance with existing requirements.”
But for Delaney, time is of the essence. He has traded successfully for 27 years despite the Firbank enduring a shooting, being firebombed three times and being crippled by the Covid-related lockdowns. He said the situation with energy prices was the worst challenge that he could remember and was recently told he owed £12,000 for two months’ gas use.
He owned a second pub, The Little B in nearby Sale, but it went into liquidation in September last year after he accrued £50,000 of debt from surging prices. He said his energy bills increased from £5,000 to £17,000 a month at this one site. “You don’t need to get a calculator out to know that’s unsustainable,” he said.
He said he is considering also closing the Firbank, which puts on regular community events in one of Manchester’s most deprived areas. “Do I look at retiring early and coming out of a pub that I’ve given my life to? It’s crazy that it’s come to this.”