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News

Don’t get caught in the contract rollover trap

As many small businesses have discovered, falling into the energy contract rollover trap can be extremely expensive. And cowboy suppliers love to snare unsuspecting businesses. To help you make sense of your contract's fine print, we have attempted to explain what a contract rollover is in its simplest terms, and laid out some strategies for avoiding the trap.

What is an energy contract rollover?

When a business energy contract expires, many energy suppliers will automatically sign you up for a new contract without any warning. This means that, unless you remember exactly when the contract terminates and negotiate a new contract before that date, you will be stuck with an extremely poorly performing contract. Getting stuck on a rollover contract is getting stuck on a very uncompetitive tariff for at least a year.

Which companies use rollover contracts?

It used to be that rollover contracts were the industry standard, however, after sustained pressure from the Government and various interest groups, the ‘Big 6’ energy firms all scrapped rollover contracts in late 2013. There has been some concern though, that since the rollover policies have been scrapped, negotiated contracts have increased in price. Among the smaller suppliers, rollover contracts are still common, and businesses which use these suppliers are still exposed to their unfair price structures. If you don’t want to get stuck in the rollover trap, but still want to get a good price from a smaller supplier then you need to be smarter with your purchasing decisions.

How to avoid the business rollover trap

The best method of avoiding rollovers is to issue your supplier with a contract termination notice, which is in line with the termination policy laid out in your contract. Your supplier may allow you to send your notification as soon as you start your contract, or they may specify a window within which you can send notification. Either way you should make sure you send notice in plenty of time. To ensure that suppliers have no wiggle room you should make sure you send them a hard copy of your termination notice (by fax or by post). You should also ask them to confirm the receipt of your notice.

For full protection get a managed contract

Although you have some defences that you can deploy against the cowboys, sometimes things can slip through the net. Businesses can get tied up in day to day operations and managing energy contracts may fall down the list of priorities. Sometimes they forget when contracts are up for renewal and this can land them in a sticky situation. At Utility Helpline we assign our customers to a dedicated adviser who will let clients know in plenty of time when their contract is up for renewal. Want to talk about your options? Talk to one of our advisers today, call 0800 043 0423.


Published by Utility Helpline on