A recent high profile report from industry regulator Ofgem has warned energy firms they must offer simpler tariffs and contracts to help consumers compare prices. Ofgem criticised Britain's 'Big Six' energy providers and demanded that they simplify a complex and often confusing system that "bamboozled" their customers. It's fantastic news for consumers. But whilst Ofgem's report has hit the headlines, the plight of Britain's small businesses - who face an even more confusing relationship with utility companies - remains largely unreported.

Inflated electricity charges for smaller businesses

Small businesses are losing a staggering £2 billion a year by paying inflated charges for their electricity alone. Yet despite this, many companies are simply unaware that they're paying over the odds for their energy and walk blindly into a confusing contract renewal system that's currently holding them to ransom. There's an alarming gulf in the price Small and Medium-sized Enterprises (SMEs) pay for what is essentially the same product and on the whole it's passive companies - those who fail to take action on their energy contracts - who wind up paying the biggest tariffs. By failing to keep track of their energy outlay and actively seeking out the best deals, these companies are sleepwalking into a situation where they're wasting thousands at a time, when every penny counts.

Unlike domestic users, who have more freedom to change suppliers, SMEs are subject to assumptive renewal contracts that only offer a limited window of opportunity to switch suppliers before being rolled over onto a new agreement at a higher rate. This confusing process means that there is an incredibly narrow period (sometimes just 30 days) in which to act; something that's easily missed by time poor SMEs. The length of this period and when it falls varies dramatically between suppliers; and whilst utility companies are obliged to send business customers a renewal letter, this can arrive months before the contract is due for renewal and the finer details are often lost in the small print.

Energy providers certainly don't make it easy for businesses to switch their supply. So it's easy to perhaps see why, despite the potential savings, just 7 per cent of businesses switched energy providers last year and more than half have never changed suppliers. Many companies simply aren't aware that they're paying over the odds for their utilities and will glaze over the second you start to mention tariffs, suppliers and kilowatts. There's also the perceived hassle that's associated with switching suppliers - small business owners simply don't have time to jump through the hoops laid out by a complicated and confusing renewal system.

How to take control

It's no use burying your head in the sand. You wouldn't ignore any other aspect of your business that was costing you so much money, so why ignore your energy outlay? Research shows that, on average, small businesses can save more than a third - up to £1,121 each year - simply by shopping around for the best deal on their electricity bill; a saving that would provide a welcome shot in the arm for any business looking to ride out the recession.

The current system simply doesn't work and like their consumer counterparts, business customers deserve a fairer deal on their utilities. But until action is taken to simplify an all too confusing state of affairs, businesses should take control of the switching process by calling on specialist support from an independent savings expert to guide them through the utility minefield. One simple way of doing this that we recommend is available by clicking here.