13 Aug What is the business energy rollover trap and how can it be avoided?
What is rollover?
The term rollover is used to describe the automatic renewal of an energy contract by the current supplier. Businesses are often unaware that they need to cancel their energy contracts at the end of a term, in order to stop the energy company automatically signing them up for a new contract. A rollover contract does not usually represent value for money, furthermore the business will be stuck with these costs for a minimum one year period so it can be a very costly trap!
Are the energy companies breaking the law?
Surprisingly, rollover is not against the law, no matter how unfair it seems. However businesses should consider the following points.
Around 60 days (but no more than 120 days) before the contract is due to end, the supplier must send the business a letter detailing the renewal offer. It should inform the business that this new contract will be automatically signed up if they do not receive notice of cancellation.
A contract which rolls over cannot be signed up for longer than a 12 month period.
How can businesses avoid the business energy rollover trap?
Take some time to study the businesses current suppliers contract. What do they require for cancellation? Do they require a termination notice? Take a look at the policy and make sure your business is ahead of the game. Diarise your contract end date and make it a priority as it could save you hundreds of pounds on your business energy usage.
Be aware that if you opt out of your current agreement, before signing up with a new supplier, you will have to pay out of contract rates. These are very expensive rates, purposely designed to get you to back into a contract with a fixed payment arrangement.
Anything else I need to know?
Whilst rollover might be legal, it is very unpopular and controversial. Companies often feel they have been treated unfairly when they are automatically rolled over onto an expensive contract. Therefore it pays to take a pro active approach to your energy solutions.
The Big 6 suppliers, (British Gas Business, EDF, SSE, Npower, EON and Scottish Power) agreed to end or amend their rollover policies by the end of 2014. However smaller companies have not agreed to do this and so you need to consider your energy solutions carefully.
If you would like us to help you secure the best business energy deal for your business and manage your contract end dates get in touch.