Ofgem Makes Business Energy Contracts Easier
A change for small businesses today attempts to ensure that small business owners can manage their electricity and gas energy supplies a little easier.
As from 18th January there are changes that Ofgem have made for all new small business energy contracts going forward easier to change and switch suppliers.
Previously there were small windows of opportunity for businesses to switch suppliers which may have been buried in the small print of contracts and if changes or notification of a change were made then the contract would be automatically renewed for another year.
This would make it almost impossible to switch suppliers and it’s estimated that over 80% of businesses would not switch and have their contracts rolled over into the next year.
Now new changes made by ofgem for micro businesses may make this a little easier (a micro business is defined by the EU as having less than 10 employees or €2 million turnover with an energy consumption less than 200,000 kwh of gas or 55,000 khw of electricity per year). The changes now have the following new rules:
- A customer must be made aware of all the conditions of a new contract
- Full terms and conditions must be made in writing to the customer within 10 days of signing a new contract
- Micro business customers can terminate the contract end the fixed term contract at the end of the term and can request termination at any time from the point of signing and the contract end date
This last change is the most significant as previously there were just a few weeks per year when termination could be made. And with electricity prices for business running from anything from 7p to 21p per kwh and gas prices running from 2p tp 6p per kwh a business may need to make a change if they receive a better quote from any of the major 6 energy companies. And with an estimated 11,000 different types of contracts available for business customers there’s certainly a lot of research that has to be undertaken before committing a company to a fixed term and fixed price energy contract.
Unfortunately this change is not retrospective and is only for the micro business community but at least a change has been made and hopefully either the energy companies can provide this for all business customers or ofgem make the changes for the entire industry in the coming months and years.
On top of this businesses can also opt out of automatic roll on contracts – all you need to do when you sign a new contract is asked to be opted out of a rolling contract and the energy company must only sign you up to a 28 day rolling contract (which helps if you forget about switching or renewing in that you will still get energy supplies but can then shop around for a better deal in the market place if one exists – which normally it will for business energy supplies as the market is very competitive).
As with most contract for business supplies the onus is on the business to manage their contract but with these changes the energy company must also communicate that the contract is coming to an end and their can renew or switch to another supplier.
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