Five of the Big 6 suppliers have ended the rollover nightmare for business energy consumers.
For years, business energy consumers have been threatened with the automatic rollover onto new contracts at the end of their fixed term period if they do not terminate or accept the renewal rates offered to them. This scandal has cost business up to three times their energy bill and harmed the cash flow and bottom line of many UK businesses.
Ofgem reduced the length of the rollover to 12 months back in January 2010, but still small and medium sized businesses are being hit with energy rates up to 300% higher than available contract prices.
Business Juice’s CEO James Constant has been working with DECC, No.10 and Ofgem for several years to create more transparency and fairness for consumers in the business energy arena.
In response to Ofgem’s Retail Market Review (RMR), back in February, James called for (amongst other things) “The total ban on rollover contracts of any length for all non-domestic customers.”
Five months later, the first of the Big 6 energy suppliers to make the move to end rollover for business energy consumers was British Gas Business back in July, and were expected to be closely followed by E.ON, who originally spearheaded the move, but did not actually announce their plans to change their rollover policy until August 23rd.
The second supplier to announce their commitment to ending rollover a few weeks after British Gas Business was nPower, who will be changing the rules for existing customers from November 2014 and for new customers from April 2014, meaning that common to other suppliers, there is still the opportunity for customers to be caught out by rollover if they switch to nPower between now and the start of November.
Following nPower was SSE who will also implement their changes from April 2014, and who in addition, announced the limiting of back billing to 12-months. This follows a similar move by Eon back in April, who was the first supplier to put a 12-month cap on back billing for business customers.
In quick succession then came EDF, the first supplier to create a fixed rate deal for customers once their contract ends, but one with no exit fee where customers are free to leave at any time, offering protection from price rises should the customer wish to stay on the tariff.
Surprisingly, the last in the line of suppliers to announce their end to rollover contracts is EON – who was originally expected to be the first – who nevertheless will also implement their changes in April 2014.
In addition, Eon followed in EDF’s footsteps, introducing a fixed-term, non-rollover option for customers who get to the end of their current contract.
They have also committed to publishing their variable rate tariffs online and to extending their renewal window so customers have longer to make a decision on their next contract rather than making a decision at 90 days.
However, customers should feel that switching ahead of their prescribed renewal window is still an option – they can secure a rate or contract they are happy with at any point during their contract (suppliers offer competitive prices anything up to 6 months in advance) and freeze it until their current contract ends, so customers don’t need to wait until their renewal window to investigate the options best for them.
The Federation of Small Businesses is now calling on Scottish Power to join the rest of the Big 6 in changing this key element of the business energy market.
It is not clear if when and how Ofgem will impose the ending of rollover contracts outside of the Big 6.
James Constant highlights the main concerns of the move to end rollover for customers:
“The changes we have seen recently from some suppliers is good news for businesses regardless of their size.
“But what concerns us is three fold 1) unless Ofgem change the license conditions not all suppliers will follow suit still causing disadvantage to a significant minority of customers, 2) those that have said they will make the change are doing this quite some time in the future. There are a large number of customers still being disadvantaged and paying far too much and who will remain to do so for a long time. 3) Our statistics already show that majority of businesses, particularly micro businesses, don’t engage in the competitive energy market and we hope that this change doesn’t encourage even fewer businesses to review the market as they suddenly think there is less need to do so.”
So whilst the steps taken by the Big 6 suppliers are positive, there is still a long way to go. Business Juice recommends that business customers still use an independent energy broker when their contract is coming to an end to ensure that they are offered a price to best suit their business needs. This may or may not be with their current supplier, but either way, they will have peace of mind that they have investigated all the options and have the added benefit of a dedicated broker to support them with many aspects of their business gas and electricity contracts.
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