Micro and Small Businesses’ Satisfaction With the UK Energy Market: Policy Implications

Abstract

While householders’ ability to navigate the domestic retail energy market has generated considerable debate, little attention has been given to micro and small businesses’ (MSBs) purchasing of energy. This paper provides the first academic assessment of MSBs’ satisfaction with the UK’s retail energy market. Using survey data from the UK energy regulator we find that while intermediaries are central to MSBs switching energy supplier, the quantity of marketing contact received from them is a key source of dissatisfaction. This dissatisfaction with marketing contact has direct policy relevance as the Competition and Market Authority’s 2016 Energy Market Investigation recommended that a database of ‘disengaged’ MSBs be established to enable marketing communications from rival suppliers to prompt MSBs to switch. We also query whether the need for more MSB engagement is obvious, given the prevalence of multi-year energy contracts among MSBs, suggesting that the ‘optimal’ switching level of MSBs likely differs from that of householders. Our evidence suggests that there could be benefits from increased regulatory oversight of intermediaries’ behaviour. Furthermore we note that existing data fail to address an issue of importance for regulatory decision making: the overlap between households and MSBs and the potential choice for MSBs between domestic and non-domestic contracts. Overall, the paper exemplifies the types of insights that can be obtained by regulators providing wider access to the surveys they commission. We recommend that UK regulatory agencies share anonymised raw survey data by default to enhance the transparency, and potentially quality, of their decision making.