Monthly Archives: July 2013

Has ‘death knell’ sounded for punitive business energy contracts?

Mark Alston, General Manager of Warwickshire-based energy purchasing consultancy ENER-G Procurement welcomes the decision by
British Gas to stop business energy contract ‘rollovers’, which result in
companies paying more.

“Rollover” contracts have become a source of excess profits for suppliers over the years and  as such there is no place for them in our mature energy supply market. The term ‘rollover’ implies a soft landing, yet the reality is that organisations which fail to meet deadlines to renew or switch energy contracts are automatically ‘rolled over’  into uncompetitive auto-renewal prices or even to extortionate ‘out of contract’ rates. This is often made worse by a lack of transparency and short timescales involved in the termination process.

“ENER-G has been campaigning for this automatic renewal process on
business energy contracts to be removed. We believe customers should be free to choose whether to enter into a term agreement, or simply pay a variable tariff
which is reflective of the actual costs of supply incurred, plus a fair margin
for the supplier.  We are hopeful that other suppliers will follow the leadership of British Gas and put an end to ‘rollovers’, but we also urge energy regulator Ofgem to properly scrutinise the alternative rates that suppliers will put in place for out-of-contract meters.

“As a practical step in ensuring businesses don’t fall victim to out of contract
default rates, ENER-G has  introduced a free Renewal Reminder Service to alert companies  to the need to renew well in advance of their contract end date. Those using the service are automatically notified in advance of their contract renewal deadline, providing ample time to renew with their incumbent supplier,
or give notice, research the market, compare deals and find the most
competitive new contract.

“ENER-G is also working to achieve greater transparency among suppliers for their third party charges. These can amount to up to 50% of an energy bill, yet are not always firm within many suppliers’  “fixed price” offerings. As such, customers can be unaware that up to 50% of their budgeted cost is liable to increase.  The company is pressing suppliers to categorise their offers for greater transparency and to produce 100% genuine fixed offerings for
clients’ peace of mind.”

ENER-G Procurement is a major broker of gas and electricity contracts to the full
range of business users, delivers energy services to Chambers of Commerce
members across England under the Chamber Utilities™ brand, and is the preferred supplier of energy purchasing and consultancy services to EEF, the UK manufacturers’ organisation.

The energy purchasing consultancy is a founding member of the Utilities
Intermediaries Association (UIA), which was established to improve standards
and enhance the reputation of third party intermediaries in the energy sector.
ENER-G Procurement is also represented on the Ofgem Third Party Intermediary (TPI) working group.  This has been set up to address key concerns raised in the recent Ofgem Retail Market Review (and to work towards recommending an industry-wide Code of Practice for TPIs.

Further information: www.energ.co.uk/procurement