Archive for February, 2014

As part of its Retail Market Review Ofgem has reviewed the controversial automatic renewal of business energy contracts.

Contract rollovers kick-in if termination is not served to the supplier within the required timeframe (which varies between suppliers), meaning the supplier can automatically roll the user into a new contract, often at higher rates and without their permission.

The energy regulator has now released its proposals to improve the protection for businesses by:

  • limiting the maximum termination notice period to 30 days
  • requiring suppliers to include current and renewal prices alongside annual consumption in renewal letters
  • compelling suppliers to acknowledge receipt of termination notice

There had been calls for automatic renewals to be banned, however Ofgem seems to have decided that these reforms will provide the clarity and transparency businesses need to avoid rollovers.

Rollover contracts are rarely, if ever, the cheapest option, so ensure you get the best deal for your business by:

  • knowing your contract end date and giving termination well in advance
  • not just accepting your renewal quote: shop around yourself or with the help of an energy consultant, as there are often savings to be made by switching

A recent survey found that around half of British workers are increasingly energy-conscious at home, but only 20% took the same attitude at work.

The poll by Rexel and OnePoll also discovered that 93% of respondents switched lights off when leaving a room in their own house, yet just 60% did the same at work. The more energy-savvy also charge their personal devices in the office rather than at home, with 32% charging them daily and 36% charging multiple devices.

As another Carbon Trust report found however, employers are probably not helping themselves with over 25% failing to ask their employees to help reduce energy consumption, and only 13% rewarded for cutting usage.

A proactive energy-savings campaign that encourages employees to adopt behaviours that cut energy consumption is therefore vital…

  • the Carbon Trust found that 60% of staff are more likely to take action if financially rewarded and 58% more likely if their actions are recognised
  • Take the message home: combine workplace energy savings training/knowledge with information on how employees can cut their domestic bills can support buy-in and action
  • Understand the workplace and the people in it, identifying how they can best be engaged and a sense of ownership developed
  • Measure – and celebrate – the results

Although Ofgem has new powers to take action against suppliers and energy brokers who missell energy, there are still a number of measures that businesses should take to ensure they’re making the best decisions about their energy contracts:

  • ensure that your broker covers the entire supplier market, not just the ‘big 6’ or a select few suppliers
  • check that they receive a standard commission % or payment regardless of supplier they recommend, and are therefore completely independent
  • know your contract end date: if you go out of contract you’ll usually be put on to punitive rates until you enter another contract
  • don’t just accept your renewal quote: shop around yourself or with the help of an energy consultant, as there are often savings to be made by switching
  • if using an energy broker/consultant ensure they’re a member of one of the industry bodies (eg Association of Cost Management Consultants or Utilities Intermediaries Association), which have strict codes of conduct

Above all, don’t wait until the few weeks before renewal to look at your energy contract; start reviewing the market at least 6 months in advance so you can minimise the risk of volatile and rising prices.