Utility companies should display contract-end dates on bills and clearly explain to business customers how to terminate their contracts so they can switch suppliers more easily, according to the Energy Advice Line.
The UK’s leading price comparison and switching service for business energy also called on suppliers to introduce standardized notice periods and adopt a “best offer first” approach when providing renewal quotes to firms at the end of their contracts.
Julian Morgan, managing director of the Energy Advice Line, the UK’s leading price comparison and switching service for business, said the calls for change reflected feedback from customers who urgently needed better information from suppliers to avoid getting trapped in expensive rollover contracts.
The calls are also in line with Ofgem’s commitment to review contract rollover regulations as part of a sweeping review of the non-domestic energy sector.
Mr Morgan said there was widespread confusion among businesses about how and when they needed to formally terminate their energy contracts; many did not even realize they needed to do this in order to change supplier.
As a result, many businesses were unwittingly being rolled over on to deals up to 50% more expensive than the fixed-term contracts they were on.
“It is time that energy suppliers came clean and were up-front about their termination requirements so that business energy customers have a chance to give notice and switch suppliers,” Mr Morgan said.
“Customers need to be reminded when their contracts are about to expire and when they need to give notice that they are leaving.
“At the moment, some businesses are finding themselves trapped in expensive deals because suppliers have deliberately made the termination provisions so onerous and confusing.”
Clear contract-end dates
Paul Franckiess, proprietor of P&L Hairdressers in London, wants clear and precise information on bills about contract-end dates. In particular, he wants bills to show the final date by which customers must give notice so they can switch to another supplier.
Under current arrangements, different business energy suppliers have different contract termination provisions that require firms to give notice in writing within a specified timeframe if they want to change suppliers and avoid being rolled over on to an expensive tariffs.
“My experience is that suppliers give false information to confuse you over the phone,” he said.
Paul would also like the regulations changed so that if a business does get rolled over onto an expensive tariff, they need only give one-month’s notice to terminate the arrangement.
Best offer first renewal quotes
Anne Thompson, from Woodhouse Cricket Club, called on suppliers to offer their best quotes rather than their most expensive quotes in renewal letters and to stop capitalizing on less proactive customers who do not shop around for the best deal.
“It can be particularly frustrating and confusing trying to calculate the tariffs and the impact on the business, especially for business that have limited opening hours, for example, social/sports clubs,” Anne said.
While she supported clearly displayed contract-end dates and other tariff information on bills, she does not support suppliers sending these by registered post.
“Suppliers would add the cost to the bill,” she said.
More information on renewal letters
Carol Towler, from legal firm carter Towler LLP, agrees that suppliers need to provide clearer and more precise information on renewal letters.
“I would like to see precise details of the new rates and dates proposed, clear and concise procedures of how to terminate the contract and also telephone contact details, whether this is to r-negotiate terms, make a general enquiry or make a complaint,” Carol said. “Telephone contact details should be provided as I have found email correspondence is rarely answered. Although even by telephone, I found it a very complicated procedure to speak with the correct person.”
The Energy Advice Line
The Energy Advice Line is a consumer champion and one of the UK’s only independent price comparison and switching services exclusively for small and medium-sized businesses. The service enables firms to quickly and simply compare business electricity and business gas prices, and to switch to the best available deal on the market.
The Energy Advice Line has produced The Business Energy Best Practice and Advice Guide to help firms combat unfair pricing tactics employed by utility companies.
The Guide explains the tactics used by power companies to make it as hard as possible for firms to switch to cheaper business energy deals. It also offers advice on what businesses need to do to avoid being trapped in expensive and onerous rollover contracts.
To obtain a copy of the guide, for further information or a free quotation, visit www.energyadviceline.org.uk