Business energy contracts and rollovers
Make sure you're up to speed on the current situation regarding controversial rollover energy contracts and why they are not the best for business.
There has been a lot of noise recently about banning controversial Rollover Energy Contracts for Businesses - even David Cameron has been tweeting about it. So, this article brings you up to speed, offering our view on where small businesses currently stand and what changes to expect over the coming months.
As has been the questionable practice for a number of years, all energy suppliers will attempt to auto-roll a business energy customer into a new - and more expensive - fixed term contract before their old one has expired. They do not need a business owner's approval to do this as it is written in the small print of every existing contract and - like it or not - the business will be stuck with the new contract for at least a year (often longer for larger businesses).
To avoid this happening - and your bills going up by an average of 30% - a business has to proactively terminate a contract by providing the supplier with notice during a renewal window. The length of these windows, and the rules on how to provide sufficient notice, are different for each supplier with some closing the shutters down when there's still 3 months left to run on the original contract.
However, all suppliers are obliged to at least send their business customers a renewal notification to draw their attention to the window that applies to them, plus customers of Eon and CNG may also notice their Contract End Date appearing on bills.
In reality, though, we know these renewal notifications are often overlooked by busy business owners and so part of the Make It Cheaper service is to provide plenty of extra warning - by post, email and phone - about renewal windows opening. We also provide the necessary templates for service notice in the required way. Any businesses simply wishing to find out when their renewal window opens and closes can also find out through Make It Cheaper free of charge - either by calling 0800 970 0077 or sending an email with the name of your supplier to email@example.com.
NB Businesses who have missed their renewal window can still apply for a cheaper-than-Rollover 'mitigation price' through Make It Cheaper at any time before the final Contract End Date has been reached.
Normal auto-roll rules will still apply to all… with the exception of British Gas Business customers.
From September new customers of British Gas Business will be offered contracts without a Rollover clause. This means that from September 2014 onwards (once an initial fixed term of 1 year has expired - see below), these customers will start to be offered a choice between signing-up to another fixed term (eg 1 year) or moving on to variable rates with a 28 notice period.
All businesses will start to see their Contract End Dates and relevant Notice Periods printed on bills - in addition to sending Renewal Letters. This doesn't mean you won't get rolled - disparate renewal windows will still be the norm in the majority of cases - but it will help any business looking to switch by providing them with much of the key calendar information required to do so.
At this point Npower will also start to offer non-rollover contracts to any business switching to them as a new customer.
As the first non-rollover contracts begin to expire, business customers (of British Gas at least) will be able to choose between fixed and variable. We'll have to wait until then to know how competitive these rates will be but, historically, customers have tended to pay extra for the ability of being able to leave at short notice. Therefore accepting a variable deal - or failing to make a decision at all creating uncertainty between you and your supplier - are two scenarios that are likely to result in being charged rates that are far less competitive than the best-available fixed-term deal.
Existing customers of Npower will be offered non-rollover contracts.
In the meantime…
Not only is the current situation complex and arguably gives the suppliers an unfair advantage but the transition to a point where Rollovers are a thing of the past and everyone - across the board - knows where they stand is going to take several years. In the intervening period businesses will find it even more difficult to know if they are on fixed or variable rates, in a contract with a rollover clause or without, or possibly even on out-of-contract rates which can be twice the price of the best deals available. This shouldn't put people off switching but it will hamper their ability to make an informed - and timely - decision about buying their energy. All more reason, then, for businesses to get into the habit of reviewing their contracts on an annual basis or, better still, have someone like Make It Cheaper looking after their interests and advising them of the best course of action.
To find out how Make It Cheaper can help save money for your business, call us on 0800 188 4915. Or, fill in the form on this page to request a call back from one of our saving experts.
James is an online content creator at Make It Cheaper. Having previously created a variety of content for a number of websites and media outlets, James focuses on making it easy for SME owners to find interesting and engaging content - as well as useful guides and online tools.You can email James at firstname.lastname@example.org
- Your business tip of the month: Make your files easy to find
- Leading insurer suggests businesses are gambling with their financial futures by not purchasing the necessary cover
- Energy efficiency improvements for small businesses
- Breaking the energy bill cycle: small business owner enjoys respite with free electricity for a year
- How the population could save by ditching their traditional energy suppliers