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What Happens When My Business Energy Contract Rolls Over?

Publish on: 06/5/21 5:01 AM

Written by Dean

In 2013, the largest energy suppliers in the United Kingdom suspended rollover contracts for good. However, the practice still continues, putting thousands of businesses at risk of being locked into an expensive energy contract that isn’t their choice.

 

Rollover contracts spell trouble for all kinds of businesses. Aside from forcing customers to pay higher rates for electricity, it prevents them from switching suppliers or transferring to another tariff for an entire year.

 

To avoid this “trap”, here’s what you need to know:

 

What is a Rollover Contract?

 

If your business’s energy deal is not renewed, renegotiated, or cancelled before its end date, your energy supplier may automatically “rollover” your contract. When this happens, your business will be locked into a more expensive tariff for another year.

 

That is why it is crucial to understand the terms of the energy contract that your business signs. Similarly, setting a reminder two months before your energy contract is due to expire can help prevent a rollover. Although utility suppliers will typically contact their customers two months before the end of their contract, because of the number of statements that customers receive from their energy supplier, this notice can easily be overlooked.

 

What’s the Problem With Rollover Contracts?

 

Being rolled over onto a contract can be troublesome for any business. Chances are, the energy rates will be significantly higher than what they were originally paying. Most rollover contracts also include conditions that prevent customers from transferring to a more suitable deal.

 

If your business’s energy contract is rolled over, you cannot switch utility online whenever you want to. Your current energy supplier will assert that the transfer constitutes a breach of contract. You will be bound to the rollover contract until it expires.

 

Is it Legal For Energy Suppliers to Impose Rollover Contracts?

 

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The “Big Six” energy suppliers in the United Kingdom permanently stopped imposing rollover contracts after receiving pressure from the Office of Gas and Electricity Markets (Ofgem) in 2013. These include Britsh Gas, EON, EDF Energy, Npower, Scottish Power, and SSE. They are the energy suppliers that provide 95% of the UK’s energy for both businesses and residences.

The “Big Six” energy suppliers in the United Kingdom permanently stopped imposing rollover contracts after receiving pressure from the Office of Gas and Electricity Markets (Ofgem) in 2013. These include Britsh Gas, EON, EDF Energy, Npower, Scottish Power, and SSE. They are the energy suppliers that provide 95% of the UK’s energy for both businesses and residences.

 

If your energy supplier belongs to the Big Six, it’s unlikely that you will have to worry about being rolled over. If you forget to take action at the end of your energy contract, it will be automatically be transferred to a rolling monthly tariff. Although expensive, it allows you to switch energy suppliers at any time without the exit fees.

 

However, plenty of energy suppliers continue to push rollover contracts. This is because it is legal for energy suppliers to automatically place their customers under a new contract. When this happens, they won’t be obligated to terminate the contract early. They do, however, have to follow certain rules:

 

Energy suppliers must provide their customers with a notice of the contract renewal. This should include details such as the kind of contract that it will roll onto, should they fail to cancel or renew their current contract. This notice should be given at least sixty days (two months) before the contract expires.

 

Energy suppliers cannot impose a rollover contract that lasts beyond twelve months.

 

How Can You Prevent Being Rolled Over?

 

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It’s easy to avoid being rolled over by your energy supplier. To prevent your energy contract from rolling over, you must take note of your renewal window, which is usually one to six months before the contract’s end date. When this window “opens”, you can begin to shop around and compare utility prices of alternative energy suppliers. You may even sign a contract with them before your current one ends.

Do not forget to provide your current energy supplier with a notice of termination. This can be sent by e-mail but it would be best to provide your supplier with a hard copy of the notice. This should prevent them from automatically imposing a rollover contract.

 

Keep in mind that energy suppliers impose different termination periods, ranging from 30 to 120 days. We recommend reviewing your energy contract to determine how much time you have to notify your supplier of the termination. If you go beyond the allowable period, you may not have enough time to stop the contract from rolling over.

 

What Should You Do if Your Contract Rolls Over?

 

If you’ve found yourself on a rollover contract, unfortunately, there isn’t much that you can do. Your energy supplier is not obligated to release you from the contract. However, micro-businesses that meet the criteria listed below should be able to rectify the issue through the Energy Ombudsman:

 

– Your business employs less than ten employees.

 

-Your annual balance sheet does not exceed £2 million.

 

-Your business uses less than 100,000 kWh of energy annually.

 

-Your business uses less than 293,000 kWh of gas annually.

 

For businesses that aren’t micro-businesses, the only option is to wait until the rollover contract ends.

 

In rare instances wherein energy suppliers failed to notify their customers of the rollover contract, the customer may take discuss the situation with the supplier or take legal action.

 

How Can You Protect Yourself From a Rollover Contract?

 

No one wants to be tied to an expensive contract. Below are some tips to keep in mind to ensure that you don’t find yourself locked into a rollover contract for another year:

 

-Make a reminder of your energy contract’s renewal date.

 

-Take note of the renewal window.

 

-Keep an eye out for the notice from your energy supplier. Make sure it doesn’t end up underneath your electric bills!

 

-Look for a better tariff using the convenient comparison tool at co.uk.

 

-Remember to thoroughly read the terms and conditions of any energy contract that you sign.

 

Don’t Get Locked Into a Rollover Contract!

 

Better energy deals are out there, but with hundreds of energy suppliers in the United Kingdom, it can be difficult to find the most suitable tariff for your business. Watt.co.uk has helped businesses across the country switch to reputable energy suppliers that offer more competitively priced rates and better customer service.

 

All you have to do is to contact us today. Our team of experts would be delighted to answer any questions that you might have.