Small firms could be paying too much for their utilities because they are reluctant to switch supplier.

Companies could save up to 40 per cent off their bills, according to Brighton-based Primediary, a specialist company that helps small business associations through the city's Business in Regeneration project.

Utility broker Clayton Smith helps firms find better deals.

He said: "The Government privatised these companies with the aim of introducing competition but almost two thirds of small businesses are still with British Gas for their gas and British Telecom for the phones.

"People are reluctant even though they are going to get a better deal if they do switch supplier.

"But this is not easy as prices are not transparent and they could be offered one thing and sold something different.

"Most of the utilities companies have low profit margins so will not go out of their way to help a small business unless it comes to them.

"You can probably save between 20 and 40 per cent but this takes time."

Many small firms did not have the time to shop around for the best deal because they were concentrating on big things, such as buying stock.

Mr Smith said: "It costs them no more to go through us. We work through a number of business associations and work with traders to make their businesses run better.

"For us it's attractive to work with, for example, the North Laine Traders Association because there are 400 shops in the area."

Primediary also help firms sort out problems with utility companies.

Brighton retailer Pat Mernagh had no choice but to go into the red when faced being cut off after British Gas sent her a £2,800 electricity bill.

Mrs Mernagh, who has run the Animal House gift shop in Bond Street, North Laine, for the past 15 years used to be supplied by Enron.

When the company went bust, the supply was taken over by British Gas. A change in meter and an error in the meter reading led to the huge bill.

She said: "It was a nightmare. I came up against a brick wall at every turn.

"British Gas took the readings from zero when it wasn't"

Mrs Mernagh contacted Primediary through the North Laine Traders Association.

Mr Smith managed to get her a refund of £2,286 and is finding her another supplier.

He said the problems Mrs Mernagh faced in sorting out disputes with utilities companies were not unusual.

But British Gas said it was rare for problems such as Mrs Mernagh's to occur and it had a whole team based in Leicester dedicated to helping businesses.

A spokesman said: "The problem here stemmed from an inaccurate meter reading, which was given to us by Enron. We could only go on the figures that we had been given.

"Where we did go wrong was issuing a final bill. It was an error on our part and shouldn't have gone out but we are looking to make a goodwill gesture to Mrs Mernagh."

For more details on Primediary, call Clayton Smith on 0845 6443160.

Wednesday April 16 2003