Kilpatrick Communications

Has British Gas sounded 'death knell' for punitive business energy contracts?

Press Release   •   Jul 24, 2013 11:53 BST

Independent energy purchasing consultancy ENER-G Procurement  has welcomed the decision by British Gas to stop 'rollover' energy contracts for business customers.

"Rollover" contracts have become a source of excess profits for suppliers over the years and  as such there is no place for them in our mature energy supply market", said Mark Alston, General Manager of
energy purchasing consultancy ENER-G Procurement. "The term 'rollover' implies a soft landing, yet the reality is that organisations which fail to meet deadlines to renew or switch energy contracts are automatically 'rolled over'  into uncompetitive auto-renewal prices or even to extortionate 'out of contract' rates.  This is often made worse by a lack of transparency and short timescales involved in the termination process. "

 "ENER-G has been campaigning for this automatic renewal process on business energy contracts to be removed. We believe customers should be free to choose whether to enter into a term agreement, or simply pay a variable tariff which is reflective of the actual costs of supply incurred, plus a fair margin for the supplier.  We are hopeful that other suppliers will follow the leadership of British Gas and put an end to 'rollovers', but we also urge OFGEM to properly scrutinise the alternative rates that suppliers will put in place for out-of-contract meters"

As a practical step in ensuring businesses don't fall victim to out of contract default rates, ENER-G has  introduced a free Renewal Reminder Service  to alert companies  to the need to renew
well in advance of their contract end date. Those using the service are automatically notified in advance of their contract renewal deadline, providing ample time to renew with their incumbent supplier, or give notice, research the market, compare deals and find the most competitive new contract.

ENER-G is also working to achieve greater transparency among suppliers for their third party charges. These can amount to up to 50% of an energy bill, yet are not always firm within many suppliers’  “fixed price” offerings. As such, customers can be unaware that up to 50% of their budgeted cost is liable to
increase.  The company is pressing suppliers to categorise their offers for greater transparency and to produce 100% genuine fixed offerings for clients’ peace of mind.

ENER-G Procurement is a major broker of gas and electricity contracts to the full range of business users, delivers energy services to Chambers of Commerce members across England under the Chamber Utilities™ brand, and is the preferred supplier of energy purchasing and consultancy services to EEF, the UK manufacturers' organisation.

The energy purchasing consultancy is a founding member of the Utilities Intermediaries Association (UIA), which was established to improve standards and enhance the reputation of third party intermediaries in the energy sector. ENER-G Procurement is also represented on the Ofgem Third Party Intermediary (TPI) working group.  This has been set up to address key concerns raised in the recent Ofgem Retail Market Review (and to work towards recommending an industry-wide Code of Practice for TPIs.

Further information: www.energ.co.uk/procurement