Small Business Electricity Roll Over Contracts Outlawed
Micro small business owners now have more transparency after changes made by ofgem the industry regulator makes it easier to know when tariffs come to an end.
The standard practice for all energy companies is to simply roll over energy contracts when they come to an end into a new fixed term contract with sometimes new fixed prices.
Standard contracts for small business electricity prices and larger corporations alike have fixed terms and special terms if you want to end the contract. Some contracts specify that you need to provide 90 days notice within a specific time frame towards the end of the contract and if you don’t then you can’t terminate your tariff or if you do you face penalties.
The problems with roll over contracts
The main problems businesses face is that if notice is not made for termination they will be placed onto a new contract for at least another year and the prices may not be the same as they had in the past. This means their tariff can be increased with new prices without them knowing (well at least until a new bill comes in the post with the new pricing). And there’s absolutely nothing the business can do because they have entered into a legally binding agreement. Additionally if you are under contract and have not provided notice the other energy companies will not want to discuss any new tariffs with you because they know you are with one of their competitors for that year.
Normally you can pay the penalities outlined but it may take many telephone calls and letters to get out of the contract you are in. If you are in this position then it may be worth either speaking with the industry regulator ofcom or energywatch who may be able to help your circumstances although you should register your complaint with your energy provider in the first instance.
Roll over contract changes for micro small businesses
A change for micro business owners (those than employ less than 10 staff and have a turnover less than £2 million) means that all energy companies must communicate that the contract is coming to an end so then the onus is on the business owner to at least shop around for a new tariff or be rolled over onto a new contract. Although most energy companies do send out letters for renewal most businesses either ignore them or they don’t get to the right person in time. Sometimes the renewal letter states that you should serve notice of termination in the next 14 days from the date of the letter but once you have received it and past it onto the right person in charge those two weeks quickly get eaten away.
Advice on any roll over contracts
Almost all business electric and gas contracts are on a rollover basis so here are our tips whether you are thinking of changing your supplier or not
- Almost all roll over contracts will be with higher prices
- Dig out your original contract and see what the terms are
- Make a note in your diary on the termination period
- You will almost certainly have to serve the termination even to get a better deal with your current supplier
- Serve the termination and search for a better tariff
Although for small business electricity roll over contracts the process may be slightly simplified these are only for new contracts and not retrospect so have a look at your contracts now and see when you should notify termination.
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