Energy watchdog in small businesses switching vow

The regulator is also concerned that some firms are being rolled over onto new contracts lasting up to three years, often without their knowledge.

As part of its reform of the energy market, Ofgem has set out new standards of conduct, with financial penalties to improve supplier behaviour.

It is considering enforcement action against some suppliers after research found firms were prevented from switching because of a high number of objections from suppliers, including some that were later withdrawn.

An example of when suppliers refuse to allow a transfer is where a users' contract has not expired, yet Ofgem says many contracts are unclear so firms are unaware whether they are tied in or not.

Ofgem chief executive Alistair Buchanan says: "During our investigation into the energy market, businesses told us about a range of problems they were having with energy suppliers and also some energy brokers.

"As we have demonstrated in the domestic market, we will also take a tough line on any suppliers we find systematically breaching rules designed to protect businesses."

'Long overdue'

The initiative is welcomed by the Association of Convenience Stores (ACS), a trade association with more than 33,500 members.

Its chief executive James Lowman says: "Ofgem's plans to extend protections to more businesses are long overdue and will be welcomed by local shops. These cannot come quickly enough."

However, he says, small businesses are still at the mercy of energy companies when it comes to back billing.

Lowman adds: "Getting an unexpected bill of several thousand pounds puts local shops and other small businesses that are at the heart of the economic recovery at risk of closure. Ofgem must intervene to stop these abuses of power."

Today's moves come a month after Ofgem announced proposals for a simpler and more competitive energy market for households.

Ofgem wants new powers

Ofgem also plans to ask the Government for new powers to take enforcement action directly against brokers for misleading marketing in the business sector. It wants intermediaries to provide clear and transparent information to businesses.