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Ofgem betray business energy customers once again

ofgem straplineAlready a year on from the Big 6 Energy suppliers having acted (albeit under pressure from the Number 10 Downing Street SME Energy Working Group of which Business Juice CEO James Constant was a founder member), Ofgem, the erstwhile energy industry regulator, published a ‘statutory’ consultation on the operation of automatic rollovers in the business energy market. That was July 2014.

That British Gas Business, SSE, Scottish Power et al had already committed to ending, phasing out or re-aligning the use of automatic rollovers was surprisingly not seen as a consideration from Ofgem in calling the consultation.

Ofgem already gave an insight into their mindset announcing their consultation on something already decided by claiming they were ‘minded’ that actually there was very little wrong with automatic rollover contracts and the trapping of unsuspecting customers into 12 months of high priced energy to the benefit of no-one but the supplier.

Nothing could be more perverse surely?

But yes, it could.

Ofgem have now ‘announced’ their decision and have passed modifications, to take effect from 30th April 2015, 18 months after the Big 6 initially acted, that will require suppliers to:

  • allow micro-business consumers to give notice to terminate a contract no more than 30 days before a contract ends,
  • provide current prices and annual consumption details on renewal letters for microbusiness fixed-term contracts, and
  • acknowledge a termination notice from a micro-business consumer within five working days of receipt, or as soon as reasonably practical after that

Horse, bolted

Chocolate, fireguard

Take your pick. Whatever you choose to call it will not be inappropriate.

That suppliers are already doing this and in many instances far exceeding this performance level again appears to have left Ofgem behind.

Ofgem talk of reducing termination notice periods from 90 to 30 days, where many suppliers have been allowing just one-month notice for years.

Ofgem also ‘commit’ suppliers to providing renewal letters to their customers ‘around’ 60 days before contract end. Given most suppliers already do this or indeed do so way in advance is seemingly of no consideration to the regulator.

Ofgem’s claim that “this will help to simplify the renewal process” attempts to laughably suggest that this was their idea. Nothing could be further from the truth.

Helpfully, Ofgem’s iron fist regulation demands the very best customer service from the energy suppliers, requiring them to:

“Provide renewal letters with current contract prices, the terms that would apply if the contract is automatically renewed or if the consumer terminates the contract and fails to leave supply.”


In addition Ofgem believes it would be awfully good if the suppliers wouldn’t find it too challenging to inform customers if the prices may change during the contract or how they will vary.

How helpful.

Equally Ofgem’s trail blazing regulation calls for renewal letters to include the customer’s annual consumption “or, if this is not available, a best estimate”.

One wonders if the supplier doesn’t know the consumption who on earth does.

Ofgem go on to say that these market-defining rules “should help micro-business consumers compare their prices and assess the impact of any price changes.”

Above and beyond.

Not only that but Ofgem believe it would be appropriate, when a supplier provides termination notice, that the supplier responds within five working days to confirm receipt.

How nice of them.

Of course though, if the supplier can’t be bothered or if it doesn’t suit their immediate interests, the ever helpful regulator has made it clear that they can instead do it whenever they wise or in Ofgem speak “as soon as reasonably practical after that”.

Dig a little deeper though and you can see the game of hardball that Ofgem actually played in delivering these ground-breaking measures.

Evidently the suppliers worried that a 31st March 2015 implementation date was too ambitious. Ofgem duly capitulated and offered another 30 days, to add to the 577 they had already wasted since the Big 6 rollover commitment of August 2013.

Ofgem did however fight the cause of business energy customers by refusing to accede to the demands of some suppliers, let us suspend irony for a moment, who claimed that the provision of such superfluous information as consumption and price on a renewal letter were “unnecessary” and “could be confusing”.

Priceless. Literally.

Ofgem ‘tore’ into the suppliers saying:

“We believe it is important for consumers to be aware of their current prices and consumption when they renew their contract”

Don’t worry guys we’re in safe hands here.

Ofgem then stood firm on the requirement for suppliers to admit and acknowledge receipt of a termination notice, eventually, saying:

“We agree that acknowledging customer termination notices is particularly important for auto-renewal contracts…. This way they can enter a new contract without facing an objection or being billed on deemed or out-of-contract prices”

Yet Ofgem admitted they had ignored the call by “a consumer group” to “require suppliers to contact customers within 24 hours of any objection to switch”.

Thanks for that, very helpful.

But the shining light of Ofgem’s wonderful world of regulation was reserved for automatic rollover contracts. This one we will relay verbatim for biggest impact, (apart from the bracketed commentary):

“Six respondents still believed we should ban auto-renewal contracts or stop suppliers from including termination fees for any automatically renewed contracts. (How impertinent)

“While these responses haven’t persuaded us to ban auto-rollovers outright (One must wonder what a rollover contract would have to include to raise Ofgem’s concern levels, perhaps the keys to the business?), we do appreciate the risks they pose (Clearly they don’t, clearly it means nothing to Ofgem to stipulate a maximum length of rollover – 12 months for micro-business customers – but to in no way regulate the price level). We do believe they can be problematic for some consumers if prices are significantly higher than an equivalent negotiated contract. (They are, between 30% and 300% higher)

“In the next six months we expect to:

  • Update our micro-business factsheet before the new rules take effect to explain these changes to consumers. (A factsheet?! Just what is needed)
  • Issue another information request in early 2015 to give us an up-to-date view of micro-business prices and the number of meter points on different contracts. This is likely to have a similar format to our information request in August 2013. (More delay, more consultation and another obvious outcome to disregard, at least it keeps them in employment I guess)
  • We will publish our findings and say whether we intend to make any further changes. (Which clearly they won’t given the years of appalling damage to businesses that automatic rollovers has wreaked and which Ofgem has continually failed to act upon)

“We will also monitor the changes seven suppliers have already taken to end auto-renewal contracts with termination fees.” (But inevitably will not do anything about this naked money making ruse to protect business energy customers here and now)


So the next time your business is caught out through opaque contract terms, a termination notice still awaiting a “reasonably practicable” response, and a 12-month premium priced contract for which you will pay a 30%-300% premium, you can thank Ofgem for protecting your business.

Perhaps we should just be done with it and let the Big 6 regulate the market, at least they’d have seen rollover contracts ended. And at least they are, however belatedly, recognizing what the business market wants, something Ofgem are palpably failing to do.