Business Cost Consultants

Remember to terminate your energy contract or it could rollover

Blog post   •   Mar 01, 2012 11:56 GMT

If your organisation is on a fixed energy contract, the chances are that it may be up for renewal in April. Hopefully, you'll have already had your renewal letter last month. If you have received your renewal letter, make sure you read it thoroughly as the terms that you originally agreed to will be different. This is the time to negotiate new terms with your supplier or search the market for better rates. The main things to consider with energy purchasing are time to market, alternative routes to market and presentation of your consumption data. See our blog on the key to successful purchasing of energy at http://bit.ly/yRf0nH

Before reviewing the market though, you will need to provide your supplier with a termination notice.

Contact your energy supplier

Usually, your supplier will require written notification that you are going to terminate your existing agreement with them at the end of your contract and they usually require more than 30 days notice (some may require more), so you’ll need to act quickly. If your termination notice is not received in time, the supplier is entitled to retain your account. They don’t have much incentive to keep the price as keen as possible, so you could be paying above the market rate. If you miss the contract end date, you will automatically roll over onto “default rates”, which can be 2-3 times the market rate at that time, and you may be locked in to those prices for at least 12 months (we have often seen 24 months). Obviously this should be avoided at all costs. It is often the case that busy energy managers and facilities managers managing a large portfolio of sites can find it difficult to keep control of all the termination dates and contract end dates, resulting in energy prices increasing. If you do have a large portfolio of supplies, why not ask an independent consultant to manage your energy procurement and contract management, thus removing this burden and allowing you to get back to other business matters.

Use an energy expert - there’s nothing to lose

The benefit using a consultant is that they know the markets inside-out. They have the resources and market knowledge to advise on the best time to buy, what the best tariffs are for your type of supply, and make sure you are not being overcharged. Furthermore, many consultants (unlike brokers) operate on a commission only basis i.e. if they don’t save you money they don’t get paid, so there’s nothing to lose. Independent consultants also have no agreements with suppliers, so they will genuinely find the best prices for you. Have you had any issues with contracts rolling over? Why not share your experience and advice below with other energy managers and facilities managers.

If you would like any independent advice with energy procurement please don't hesitate to contact us.