Top 100: Businesses warned to be beware when renewing energy contracts
We highlight serious issues around energy deals putting some small businesses out of business in the hope it helps others avoid the same fate – and also unearth some potentially very good news indeed!
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Dear Readers,
We hope you had a great weekend. Welcome to the first edition of The Raikes Journal of the week.
Last week saw us profile the incredible Florence Nyasamo-Thomas, one of the founders of Cheltenham-based county consultancy Lives of Colour, and highight the work it does to help companies and organisations in the county better understand race and diversity.
There was also a report on a fascinating meeting for businesses and third sector ogranisations interested in the B Corp journey, staged by QuoLux, in which it answered the question “can ‘doing good’ really be good for your business too?”. And we revealed that Hartpury University and Hartpury College is one of the early backers making Raikes happen.
On Friday we ended with another edition only our paid-for members could read, in which we revealed how figures from UCAS (the Universities and Colleges Admissions Service) show apprenticeships could be on the verge of overtaking degrees in terms of popularity. The rise and rise of apprenticeships impacting not just on the next generation of talent - as in the younger generation - but as in everyone of working age, no matter how old.
We thought it was a moment worth marking. We hope this week proves as interesting - and we wish everyone the every, very best.
Please do continue to bear us in mind for your stories and ideas. The best email currently is andrew.merrell@raikesjournal.co.uk. Or telephone 07956 926061.
Group subscriptions can get a 20 per cent discount here…
* Everything you read on Raikes is made possible by the generous support of our partners (we’ve already let you know about QuoLux and Gloucestershire College and more partners will be revealed over the coming weeks) our founding members and our paid-up subscribers. A massive ‘thank you’ to all our other subscribers too. The support from all of you is invaluable! For commercial opportunities visit our About page. To get in touch email andrew.merrell@raikesjournal.co.uk.
Why today’s main story?
We highlight the tale of a businesswoman from Gloucestershire whose small family cafe is facing closure after she was caught out by an energy contract that automatically renewed her onto some of the highest rates ever - for the next three years!
Why is that important? Her plight highlights a situation many thousands of other UK-wide are businesses are finding themselves in, and which there appears to be little recourse - yet! And Raikes wanted to give her the platform to highlight the issue - which we cover in full.
We also include some potentially good news for businesses going forward, from Ofgem, which seems to have been fighting on their behalf for some time.
But we don’t want anyone going away thinking that means everything is solved. When we wrote the article we phoned the cafe owner to ask whether we had told her side of the story fairly. She said she still dearly wanted to make her business work, but was considering dissolving it as a result on the energy deal!
We hope the article helps apply a little more pressure for change, informs others and helps them avoid the same pitfalls.
Our chosen charity: Teckels Animal Sanctuary
Fundraisers come in all shapes and sizes, but sometimes it is the most simple ideas that hit the bullseye. This darts doubles tournament staged by Randall & Payne is one of those. The county accountants is staging the event on April 25 from 6pm to 8.30pm and inviting teams to step up to the ocke and take on all-comers. A £30 entry fee will secure your place in a league format with a guarantee of at least three games. All money raised will go to its charity of the year, the brilliant Teckels animal charity, which rescues cares for, rehabilitates and rehomes cats and dogs and prides itself on finding them forever homes. Fancy supporting it, making some new friends, and getting your hands on that trophy? Contact Jo Kline at marketing@randall-payne.co.uk.
Your Raikes’ briefing
🏆 The clock is ticking on this one. If your business is in the Cotswolds you could well be eligible to enter the Cirencester Business Awards 2024, sponsored by Redkite Solicitors. Due to take place on Friday July 5 in the Royal Agricultural University’s Bourflour Hall, which can hold up to 120. The evening will start with welcome drinks before the awards start, which will be hosted by Vernon Harwood. Tickets are £65 per person for members, and £85 for non-members. But the most pressing time to bear in mind is if you plan to enter. There are 10 categories, and the Business of the Year prize too. Applications must be submitted by email to awards@cirencesterchamber.org.uk no later than 24 May 2024.
🖥️ You can’t say that CyNam is doing what it can to interest young people from county schools in the opportunities available in the world of cyber. It recently joined foreced with CACI Ltd and CACI Information Intelligence to host year 12 and 13 students from Newent Community School. The day kicked off with a tour of Hub8, the workplace for cyber-focused county firms, and a talk from representatives of Gloucestershire College - which offers numerous cyber-related courses up to degree levels, and CACI about the various career paths available. Discussion ranged from apprenticeship routes into the cyber sector to broader career prospects. You can find out more here.
🏊🏽♂️ Funds totalling more than £300,000 have been secured for a series of projects and improvements that will apparently help reduce carbon emissions at Cheltenham's much-loved Sandford Parks Lido. Cheltenham Borough Council (CBC) and Sandford Parks Lido have secured over £306,000 from the Sports England Swimming Pool Support Fund (SPSF), with additional support of £10,000 from CBC’s Cheltenham Zero Community Grant. The grant from the Cheltenham Zero Community Fund was allocated from an underspend from the £50,000 pot of funding that was originally made available in 2022/23 for community groups to tackle energy efficiency projects, as part of Cheltenham’s work to help address the climate emergency. The news comes from a press release from the council we’ve published in full in our PR Wire channel.
🚌One of the latest press releases Raikes has received from Cheltenham Borough Council flags some potential business opportunities in the pipeline - which is why we have both published it in full in our PR Wire channel, where we are building a library of unadulterated useful releases for you to read - and also write these words here on today’s edition of Raikes. The council says contracts for both bus services and cafe concessions at its new Arle Court Transport Hub could be opened up to bidders - if a meeting on March 27 goes to plan. The proposal is to award the cafe contract for a 10-year period. Other contracts would be for a high-frequency bus service between the new hub and Cheltenham town centre. Read more here.
Businesses warned to be beware when renewing energy contracts
We highlight serious issues around energy deals putting some small businesses out of business in the hope it helps others avoid the same fate – and also unearth some potentially very good news indeed!
By Andrew Merrell.
As far as Laurence Olnois was concerned she was doing her best in the thick of a busy day and glad of the help of a broker who promised to find her ‘the best energy prices’ he could.
But when she began looking into securing a new deal this year, well ahead of the end date of the deal secured by her broker, she found her business had already been signed up to some of the very highest energy rates the UK ever – fixed for the next three years.
With energy prices having already fallen considerably, and likely to fall further, it has left a bitter taste and a small family business in a sector where margins are everything facing a serious challenge.
Olnois, from Newent, who runs the popular The Ginger Nut Cafe on Ross-on-Wye with her daughter, who lives in Cheltenham, said she wants other small business owners to beware in the hope it will help them.
“It could close the business. It is that serious,” said Olnois, a depressing thought after investing in a refurbishment of the High Street cafe and gallery over the winter period.
A search on social media site Trustpilot found many favourable reviews for the firm Bionic, which locked her into the energy deal, but also angry comments from others caught in the same type of contract that renewed when prices were at some of their highest ever.
Bionic describes itself as a one-stop shop for business essentials - energy, insurance, connectivity and finance.
A post on social media about the challenge being faced by The Ginger Nut Cafe put it in touch immediately with 10 other small businesses facing similar struggles and the group has already had interest from campaigning television programme Watchdog and a national newspaper, both keen to look into the story.
A quick trawl on Facebook revealed another group called with more than 100 members.
The Guardian newspaper warned about the issues around these types of deals for businesses, which relate to numerous energy firms and brokers, back in April 2023. It said: “Around a quarter of the UK’s 5.5 million small businesses – over one million companies – may have been forced to renew their long-term energy supply contracts at the peak of the market, according to separate surveys from the British Chamber of Commerce (BCC) and the Federation of Small Businesses (FSB).”
It was a situation, said the article, that left many of the businesses affected in a “perilous situation”.
A survey by the FSB, quoted by The Guardian, found that 24 per cent of small businesses were on fixed deals, and that 320,000 may struggle to pay their bills.
“The BCC estimated over a quarter of the UK’s small businesses signed new energy contracts when prices were at their peak at the end of last summer (2022). About 60 per cent said they would face difficulties paying after March 2023,” said the article.
Ironically it was a broker acting for Bionic that, off the record, warned Olnois about the auto-renewal for three years – but it came months after she had already agreed to the initial contracts, not realising the implications at the time.
She has since heard the recording of the interview with Bionic (as has Raikes) in which she agreed to the deal and in which the firm does mention all the salient points - including how it would secure the best price it could at the time of renewal for three years and remove the stress of annual renewal.
But putting everything together in hindsight, realising the price fix would happen months before her existing deal ran out, that it could coincide with and be allowed to happen close to the peak of the highest ever rise in energy prices, and that she might miss any reminders about her new deal is of no help to her now.
“We had a broker come into the cafe and he said he could help us find the best rates. I said, ‘that’s great, but we don’t need to renew anything until May, leave your card and I’ll come back to you’,” she said.
“He then checked and said ‘oh, you’re already with us’, but suggested, off the record, I check and make sure we do not go onto the auto-renewal rate when I my contract renews.
“When I checked it turned out the contract had already been renewed, 10 months before the current one came to an end. I have phoned and emailed, but they said I am signed up for three years there is nothing they can do.
“It is a terrible rate. It is 31.7 pence per kwh. I think you can get about 24.9 pence currently elsewhere.”
Bionic told Raikes it had gone through all the details to make Olnois aware before she had agreed to the deal and sent her two emails and texts reminding the deal would renew when it did – as agreed.
But the Gloucestershire businesswoman does not recall receiving any such messages and is left wondering if, in the course of the busy life that is the lot of a small business owner, whether the emails went into her junk email folder or were ignored as spam as they arrived months before her then current deal was due to end. The texts were never recieved, she said.
Raikes asked Bionic if it would comment on the following...
In light of the negative impact of automatic renewal, especially in a volatile energy market, is the company considering reviewing the practice so that systems better protect their customers?
How would Bionic respond to the accusation that while it is doing nothing wrong, such renewals may not always be acting in the best their customers' best interests?
Would Bionic consider renegotiating contracts for those companies facing ruin as a result of being pulled into long term contracts fixing them on high rates?
Are brokers working on behalf of Bionic paid a higher fee for deliver customers on auto renewal?
Would Bionic consider advising brokers not to sign customers onto auto-renewal when markets are at their peak?
Ofgem is pushing the Government to change the law to introduce regulations for brokers and other changes including making contracts more transparent for business customers - acknowledging those customers are not currently protected and best practice guidelines need urgent review. Those changes may come into force later this year. Does Bionic welcome the review?
The company gave us this statement: “We are truly sorry at how dissatisfied The Ginger Hut Cafe are with our service.
“Over the nine years of our digital renewals scheme, we have renewed over 200,000 small business customers, saving them a total of £200 million vs going onto expensive out-of-contract rates.
“As a result of the price volatility in the energy market, we're aware that a small number of customers have been dissatisfied, and we address this with them directly on a one-to-one basis, as we have with Ms Olnois.”
Bionic Group can trace its roots back to 2007, when Jonathan Elliot founded Make It Cheaper because he felt many small businesses were paying too much for their energy.
Sam Holliday, from the Federation of Small Businesses in Gloucestershire, said: “This last year energy prices, and trying to find staff, were the two biggest killers of businesses.
“It has calmed down now. But those businesses caught on these kinds of deals are still going to be really hurting."
Raikes asked for a statement from the Energy Ombudsman, which exists to provide a free and impartial service that aims to resolve disputes between consumers and suppliers in the energy sector
That statement said: “When entering into auto-contract agreements, microbusiness consumers can authorise a broker to negotiate, secure and enter a contract on their behalf.
“The details of this arrangement should be clear to the consumer. Microbusinesses should complain to their broker if they feel they have not been treated fairly and, if their dispute remains unresolved after eight weeks, then they should contact us.”
Raikes asked for a statement from Ofgem, the Government regulator for the electricity and downstream natural gas markets in Great Britain.
What it got back reflected the issues Olnois and other small businesses have outlined above – and ended with some potential good news.
“We have asked Government to introduce regulation of energy brokers, who fall outside our remit. While this is considered, we are working to ensure that customers are properly informed and protected with appropriate regulation on energy suppliers.
“Ofgem has asked the Government to extend access to the Energy Ombudsman to a larger part of the business sector. This route is only open to domestic energy customers and micro-businesses.
“The new rules that Government are consulting on will allow small businesses, in line with the proposed definition from government, to be directed to the ombudsman by their energy supplier after eight weeks if their complaint has not been resolved.
“We are working with stakeholders, including suppliers, trade organisations and customers, to make business energy bills as clear and easy to understand as possible.
“Over the coming months, we will continue to hold workshops with stakeholders and issue a best practice guide on billing transparency to encourage suppliers to further support their customers.
“Ofgem’s statutory consultation to change Supplier Licence Conditions closed at the end of 31 January 2024. This consultation includes several proposals including contract transparency, so business customers see how much they are paying to third-party intermediaries (TPIs) or energy brokers in their energy charges.
“Once all responses to the consultation have been considered, we expect any new rules to be in place by winter.”
Whether this comes too late for The Ginger Nut Cafe, remains to be seen.
Our weekly ideas list of things to do
Tuesday
🖥️ 💷 The Growth Hub in Stroud is due to stage this on from 9am to noon at its base at South Gloucestershire and Stroud College (SGS), Stratford Road (GL5 4AH). Called ‘Online: How to get more leads through your website’ this is all about helping you grow your business using your website.
Wednesday
🖥️ ☕ Gloucestershire College is inviting you to its Cheltenham campus for an IT and cyber drop-in session. You’ll get a chance to meet its employer training team, hear from its apprentices, tour the college’s Advanced Digital Academy (ADA) facility and even get involve with hands-demonstration exercises to get a taste of how it helps apprentices develop thier skills. Tea, coffee and pastries will be provided. The event is due to take place on Wednesday March 27 from 9am to 10.30am. Find out more here.
🖥️🚜If you run a farm business and are interested in data management (we admit, it is a niche topic! But we believe in giving everyone some air time!) then you could well be interested in this. Hartpury University and Hartpury College, who are considers experts in the subject - is staging this event from 10am to 1pm. You'll be introcued to everything from the basics of datal collection and management in farming to exploring the different kinds of information relevant to your business - from weather, soil, crop yield, customer insights and marketing data. Read more here.
Friday
🍞 🥕 🧀 🍰 In case you had forgotten - Gloucester Farmers Market is every Friday on The Cross in the middle of the city.
* Everything you read on Raikes is made possible by the generous support of our Founding Partners (we’ve already let you know about QuoLux and Gloucestershire College and more will be revealed over the coming weeks) our founding members and our paid-up subscribers. A massive ‘thank you’ to all our other subscribers too. The support of all of you is invaluable!
🔓 You’ve been reading a free edition of The Raikes Journal, for which we are grateful. Please do spread the word about what we are trying to do - create a real, journalistically-led, community-orientated, Gloucestershire-focused digital magazine. If you upgrade to paid, you will get on average eight extra members-only editions every month and will be able to see beyond any paywalls, as well as read Raikes’ rolling Top 100-plus Businesses in Gloucestershire series. You will also be allowed to comment on stories, make suggestions for what we should be writing about, vote in our awards, and might even be invited to our roundtable events. And you’ll be supporting the rebirth of high-quality journalism in Gloucestershire on a website championing the county you love — all for just £2.30 per week (Ask us about 20 per cent off for groups of two or more subscribers).