The Rollover Trap

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 SME 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 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 penalties 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 OFGEM or Energy Watch who may be able to help your circumstances although you should register your complaint with your energy provider in the first instance.

A change for SME 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.

Almost all business electric and gas contracts are on a rollover basis so here are some tips whether you are thinking of changing your supplier or not

 

  • Almost all roll over contracts will be with higher prices sometimes 100% more
  • Dig out your original contract and see what the terms are
  • Make a note in your diary on the termination period
  • You must serve the termination notice even to get a better deal with your current supplier
  • Serve the termination notice and search for a better tariff

Although for SME 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. Invariably give YorServ Solutions Ltd a call now and let us do the work for you and we can do this for FREE.