The Federation of Small Businesses (FSB) has called for the energy regulator Ofgem to take action on the standing charges paid by small businesses, many of whom have seen the daily fixed price they pay, regardless of usage levels, soar over recent months.

FSB has written to Ofgem’s chief executive Jonathan Brearley to draw his attention to the issue, and to recognise the “specific, negative impact standing charges are having on small firms”. Small businesses based in rural areas have been disproportionately affected by standing charge increases, which exacerbates the existing rural-urban divide and ‘[undermines] efforts to level up more remote parts of the UK’, the FSB’s letter says.

Standing charges are used to fund network infrastructure, operating costs, and policy costs for schemes such as the Warm Home Discount, but this can be difficult for small firms to comprehend. Business customers are not covered by the energy price cap for consumers and many small firms suspect that their costs have been hiked as a result.

FSB’s Policy Chair, Tina McKenzie, commented: “We want Ofgem to do a thorough review of standing charges for businesses as well as consumers, for better transparency and to discern whether energy companies are behaving fairly towards their small firm clients. “Small business energy customers behave in a way more akin to consumers than big businesses, lacking the resources, the expertise and the buying power necessary to get the best possible deal out of their energy suppliers.

However, they do not benefit from anything like the same level of protection as that rightly available to households, leaving them caught between two stools. “Many small businesses could be forgiven for suspecting that they have been seen as something of a soft target for price hikes in their standing charges, and they do not have a full picture of where the money they pay on a daily basis is going – something that needs to change.”