Small businesses must be protected by electricity market safeguards to prevent energy bills from escalating further, the Federation of Small Businesses (FSB) has warned in a new report.
The FSB is calling on the Government to ensure that safeguards are put in place around carbon pricing to treat small businesses in the same way as domestic users.
It is concerned as the Government unveils its While Paper on Electricity Market Reform today. In the 2011 Budget, the Government announced plans to reform the electricity market and introduce carbon pricing. The aim to make renewable and nuclear energy more attractive energy sources and decrease the UK's dependence on fossil fuel energy.
The FSB argues in the report 'Small business and infrastructure: Energy', that while it supports the idea of incentives to invest in low carbon infrastructure, there needs to be safeguards in place to prevent electricity generators from passing the carbon price on to consumers by pushing prices up further.
John Walker, National Chairman, FSB, said: "Energy companies have increased prices sharply over the past five years, with yet more rises over the past few weeks. There is a huge risk that introducing a mechanism to increase electricity prices generated by fossil fuels will further inflate prices for the smaller players as generators pass on the extra costs to consumers and small firms.
"This concern comes at a troubling time for small firms and is yet another thing that will prevent them from growing their business and taking on staff - precisely what the Government is asking them to do. The Government must ensure it puts safeguards in place to protect consumers - including small businesses - and prevent energy companies from passing on the levy."