The Federation of Small Businesses (FSB) has urged energy suppliers to renegotiate fixed contracts for small firms on market-peak tariffs.

Research carried out by the FSB revealed that many small businesses are trapped in contracts that mean that their latest bills are at last summer's peak market rate for energy, despite wholesale prices having fallen since the winter of 2022.

13% of small firms polled fixed their energy contracts during market peak in 2022, the FSB found. It suggested that 93,000 small businesses could be forced to downsize, restructure or even close.

The business group has urged energy suppliers to give small businesses the option to 'blend and extend' their fixed energy contracts, allowing them to renegotiate or sign up for longer.

Tina McKenzie, Policy Chair at the FSB, commented:

'Having come out from a tough winter, this spring is supposed to be the beginning of economic recovery, but tens of thousands are still very much in survival mode because they are tied-in to sky-high energy contracts.

'Many small businesses agreed to lock in energy contracts last year to ensure they qualified for the maximum level of government support. Now, with that support largely disappearing, they are once again faced with massive energy bill hikes as rates go back to pre-Energy Bill Relief Scheme level.'