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Scrap Rollover Contracts for Business Energy Users

Comment 4th February 2016

Small businesses (& 3rd Sector) need more help than ever to switch energy contracts because of new rules brought in by Ofgem (18.1.10) which were intended to simplify the process. Currently:

  • No two energy suppliers have aligned rules
  • Confusion over what ‘microbusiness’ means
  • Renewal windows and ‘rollover trap’ still exist

Scrapping the rollover clause in business energy contracts and standardising the renewal process across all suppliers will enable more switching activity and lead to greater competitiveness over pricing.

Why does this matter?

Different interpretations of the new Ofgem rules by the main business energy suppliers means no two contract termination ‘windows’ are the same. These windows – in which businesses must serve notice to avoid having their contracts automatically renewed – are as narrow as 30 days and may have already closed as much as 90 days before the contract end date. Make It Cheaper research shows that over 80% of businesses do not know when their energy contracts come to an end and so usually end up being ‘rolled’ by their existing supplier whether they like it or not. 

Typical Business Electricity Rates:

  • Switching rates of 7p/kWh
  • Renewal rates of 12p/kWh
  • Out-of-contract rates of 17p/kWh

A further area of confusion is the size of business to which the new rules apply. Some, but not all of the suppliers, are following Ofgem’s criteria that, in order to qualify, a business must employ fewer than ten people and have an annual turnover of less than 2 million euros – or use less than 200,000 kWh of gas / 55,000 kWh of electricity a year.

For a free and independent downloadable guide to finding the cheapest electricity or gas suppliers for your business see http://www.makeitcheaper.com/media/13832212/mic-printable-guide.pdf – or register for Make It Cheaper’s ‘Business Energy Contract Checking Service’ by calling 0800 970 0077. One quick phone call is all it takes to take advantage of this free, no-obligation service, which will tell you your earliest switching dates and the cheapest rates available.

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