Ofgem urged to address deemed rates for fair business energy pricing

Box Power has concerns about deemed rates in the non-domestic market – the consultancy believes these rates are “unduly onerous” and in breach of SLC obligations

In a recent letter addressed to Ofgem, not-for-profit energy consultancy Box Power has voiced its concerns about what it perceives as unfair practices in the non-domestic energy market.

In the letter, seen by Energy Live News, Box Power raises the issue of deemed rates that many business customers face.

They argue that deemed rates, which are rates charged to customers who are out of contract, are still “unduly onerous” and they consider this to be a breach of Standard Licence Conditions obligations.

In response to Ofgem’s consultation regarding the review of the non-domestic market, Box Power stated: “Given as an example from major suppliers with some gas rates still at say 17.5p (23rd July) when a contract price is just say 6p shows this still needs urgent intervention, then this practice of supplier profiteering is still happening today, still horrendous and still unaffordable.”

Box Power’s proposed solution is a mechanism they call “wholesale price plus.”

This mechanism is designed to bring fairness to the non-domestic energy market by setting flat non-commodity rates and risk premiums for gas and power, making the pricing structure more transparent and equitable.

An Ofgem spokesperson said: “We welcome Box Power’s feedback to our in-depth review into the non-domestic market, along with all other responses to our consultation.

“As well as setting in place a number of positive changes, Ofgem has made several proposals to better protect businesses from sharp practice in the energy market and is already taking action.

“We will be reviewing and considering all responses in advance of making formal changes. This includes updated guidance for deemed contract rates.”

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