Rollover is an expensive trap that is all too easy to fall into. Here we explain what it is, your legal rights and how to avoid it.
When your business energy contract is due to end, you need to cancel it within a set time period or your energy supplier can (and will) automatically sign you up to a new contract. This is what is called a ‘rollover’ contract.
The contract you’re rolled over to will not be good value for money or a competitive tariff, and you’ll be stuck with it for at least one year.
Rollover and the law
Rollover might seem unfair, but it isn’t against the law and it doesn’t break any rules.
There are however some rules around how rollovers should be handled that provide you with some protection if your business is a micro business:
- Around 60 days (but no longer than 120 days) before your contract is due to end, your energy supplier must send you a letter telling you the details of your renewal offer and the contract you will be rolled on to if you fail to act on your renewal.
- You can’t be rolled over to a new contract that lasts longer than 12 months.
Once you’ve received your renewal letter, you will then have a defined period in which you need to tell your energy supplier that you don’t want to accept the tariff you were offered. This period is specific to each supplier, visit our dedicated supplier pages to understand the notice period your supplier needs to prevent you being rolled over. You can also identify which suppliers operate a rollover policy and which do not in our dedicated supplier pages.
Rollover, the market and the future
Rollover is controversial. It’s unpopular with businesses who get caught out and they feel like they’ve been unfairly treated.
It also contributes to apathy, because for many busy businesses it’s all too easy to let your contract roll over, even though it’s an expensive option.
Business Juice has actively worked with consumer organisations such as the FSB, Consumer Futures and the Forum of Private Businesses as well as Energy UK, Ofgem, DECC and Number 10 Downing Street as part of the SME Energy Working Group.
James approached the government over the concerns around rollover in 2012 and by 2013 the working group had been established and resolved that its number one focus should be to find a solution for rollover contracts.
By the end of September 2013, all of the Big 6 Energy suppliers, British Gas Business, EDF, SSE, Npower, EON and Scottish Power had agreed to end, or amend their rollover policies by the end of 2014. Indeed these policies are now largely in effect and customers are benefitting of new found freedom of movement already.
Each supplier set different timescales and solutions and by visiting our dedicated supplier pages you can understand your suppliers’ policy.
Beyond the ‘Big 6’ the situation is less clear, most smaller supplier continue to operate rollover contracts, citing their importance to the security of their portfolio. It is important to point out that rollover contracts don’t have to be poor value for money and even if your chosen supplier continues to operate rollover contracts it needs to be seen in the overall context of the market price.
A spokesperson for Business Juice said:
“The disappearance of rollover contracts from the offerings of the Big 6 will in all probability go unheralded however there is no doubt that it is the single biggest shake-up to the business energy market since the opening of competition.
“The early days of lobbying for this to happen were tough, there was genuine interest, but other policies and concerns took priority for the government.
“I was therefore delighted to be contacted by Number 10 in 2013 where they made their concern about the plight of business energy customers clear.
“To achieve what was delivered in a few short months after our initial meeting must be credited to the willingness of Energy UK (the trade body that represents the majority of UK energy suppliers) and the government to grasp the opportunity to change the competitive landscape of the business energy market for the better.
“Whilst there is still a lot of work to do to move all suppliers to a no-rollover policy, and in awaiting this there is a need to continue to educate businesses on the importance of avoiding the rollover trap, there is a real confidence that the vast majority of business energy customers will now be protected from the more permissive aspects of the rollover contract by the end of 2014.”
To find out your energy supplier's policy on rollover visit our dedicated supplier pages for more information.
How can you avoid being rolled over?
If your supplier continues to operate a rollover contract and your business is a micro business, you can avoid being automatically rolled over by providing termination notice to them in line with their policies.
To find out your energy suppliers’ policy on termination notice visit our dedicated supplier pages.
Business Juice Top Tip
Regardless of whether you terminate by email or fax, always ensure that you send a written copy to your supplier by recorded delivery to be certain that they have received your notice.
Once you’ve terminated in line with your contract, you need to be very diligent about finding a new contract in plenty of time.
If your supplier allows termination at any point before a set date then it’s a good idea to send your termination notice in almost as soon as you start your contract.
If your supplier requires termination not before and not after a certain date then it is really crucial that you serve your notice at the earliest possible point in that window.
Regardless of when you terminate (as long as you do), you can use Business Juice to secure you a new contract anything up to 6 months before your contract end date.
You won’t be able to start this contract before your current one finishes but you will be able to lock in your prices at the earliest opportunity so that when you see a good deal, you can act to secure it.
If, for whatever reason, you terminate your contract with your current supplier but do not agree a new contract with them or another supplier before your end date then you will have to pay out-of-contract rates. These are very punitive rates designed to force you to agree a lower priced, but still premium priced fixed term contract with the supplier.
To find out your energy suppliers’ policy on out of contract charges visit our dedicated supplier pages.
Business Juice Top Tip
If you’re short on time or looking to cut down on admin, just let us here at Business Juice know when your contract end date is and we’ll provide you with the best prices in the market well in advance of your renewal so you can secure the right deal with little or no effort. Just call us on 0800 051 5770 to chat to a friendly Energy Expert.
What can you do if you have been rolled over?
If you have been rolled over, sadly, it’s too late in most circumstances, there’s simply nothing you can do.
This is why the rollover contract is so unfair as individual circumstances were irrelevant, if you missed the opportunity to terminate or negotiate, you rolled.
However, even if your supplier won’t release you from your contract Business Juice will work with your supplier to negotiate backdates for customers caught by rollover terms. Not all suppliers offer this and not all customers will be granted this however it is one benefit that Business Juice can bring. What is for certain is that you will remain on supply with the supplier, it will just be a question of how much you will pay for the pleasure.
For most rollovers however, you will be locked in for the full 12 months and whilst this will be both expensive and frustrating it pales next to the prospect of making the same mistake again. Therefore immediately terminate your contract as soon as you become aware you have been rolled and contact Business Juice with your new contract end date so we can line up a deal for you well in advance of the next deadline.
Happily with the Big 6 move to drop rollover contracts by the end of 2014 the majority of customers will soon be rid of this risk, but for those with smaller suppliers there is still the spectre of rollover to deal with.
Business Juice Top Tip
Apathy is the most dangerous weapon in the business energy suppliers’ armoury. By not grasping the initiative with your business energy contract you are providing a free gift to the supplier to renew your contract on uncompetitive rates that they couldn’t possibly offer in the marketplace. Don’t be apathetic, even if you don’t have the time or inclination, simply establish your contract end date, let Business Juice know, and we’ll do the work for you. Don’t let apathy get the better of your business finances.
If the worst happens and you are rolled over and you are certain that you didn’t receive a renewal letter before your contract was due to end, then you have grounds to argue the case with your energy supplier.
- Ofgem: Helping small businesses get the most out of the energy market
- Ofgem: The Retail Market Review: Non-domestic Proposals
- Parliament.uk: Micro Businesses and Energy Contract Roll-Over Bill 2012-13