UK businesses risk losing thousands of pounds a year by failing to keep track of when their fixed-price energy contracts expire, according to the Energy Advice Line.
One small family butcher in Birmingham recently missed out on saving more than £11,000 a year on its business electricity bill by overlooking its contract renewal date.
The firm’s energy supplier, with whom it had been a customer for 10 years, automatically switched it to an expensive out-of-contract tariff when it failed to give notice on the required date.
Julian Morgan, managing director of the Energy Advice Line, the UK’s leading price comparison and switching service for business, said firms contacted them on a daily basis with similar problems.
“This situation is not uncommon and we help firms that, for a variety of reasons, have not given notice to their supplier in a timely way and told them they want to leave and go somewhere cheaper,” Mr Morgan said.
“This can be an extremely costly mistake for a business to make. Unfortunately if a business is rolled over at the end of a fixed term they will be locked into a contract that is usually 30% more, or even higher, than the current retail price.
“When this happens, it’s too late and the business will not be able to exit the contract until it expires in 12 months.
“Energy suppliers do not reward customer loyalty, in fact, the opposite is true. They make a significant proportion of their profits from loyal customers who stay with them year-on-year without shopping around and looking for a better deal.
“Suppliers simply charge them an inflated price for their energy compared to what they would be charged if they switched to a different company.”
Mr Morgan urged business electricity users to be vigilant and ensure they know when their fixed-price energy contracts expire. They also need to be absolutely certain of when to serve notice to their supplier.
“In the case of the Birmingham butcher, they only had 30 days to give notice from the date they received the renewal quote from their existing supplier,” Mr Morgan said.
“This short contract termination window leaves the customer very open to being automatically flipped to an expensive rollover contract.
“Letters can get lost in the post, be opened by colleagues or the wrong person, simply sent to the wrong address or arrive when the person responsible for dealing with energy bills is away on holidays.
”It’s an unfair strategy by energy companies but that’s what many of them do.”
Mr Morgan said it was essential for business energy users to compare the renewal rate they receive from their existing supplier with other deals available in the marketplace.
“Always use a reputable and independent online price comparison and switching service like the Energy Advice Line, that displays prices online and offers customers a completely transparent view of the deals available.
“Not only will we be able to find businesses a much better tariff than that offered by their existing supplier, but our service is completely free, independent and transparent.
“In addition, we offer a free contract management service, which means we help firms throughout the term of their contract with any problems.
“Importantly, this also includes a free renewal reminder service so they can never forget when their fixed-price deal is coming to an end.
“And if you have accidently been caught in a rollover contract, you can still get in touch with us and we’ll remind you when your contract’s up and help you find a better deal next time.”
The Energy Advice Line helps small firms through to large non-domestic energy consumers search the market for the best available business electricity and business gas deals.
The service saves firms the time and trouble of trawling through thousands of business electricity and gas tariffs by analysing prices from its panel of energy suppliers and matching them with the requirements of the organisation.
Significantly, tariffs are compared on a like-for-like basis without the use of product names or payment plans, which means that quotes are easy to understand and accurate.
For more information visit www.energyadviceline.org.uk