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Managing the commercial energy switching cycle

Micro businesses are required by the regulator Ofgem to receive notification when their contract is due to expire. The letter is sent out three to four months prior to expiration outlining new rates for the next period.

If you don't act, then you'll be automatically accepting rollover rates that effectively increase your prices by at least 30% at the same duration as your original contract.

Activating the termination clause while remaining out of contract places your business on even more expensive tariffs. The advantages of switching your trade from one supplier to another far outweigh the disadvantages of either doing nothing or staying loyal under your current agreement.

Electricity and gas switching cycle

Understanding your renewal letter

Rollover tariff rates

Ignoring your renewal letter automatically extends your contract for another term. Your new fixed rates will increase from between 30% to 65% depending on your consumption and meter.

Accepting your renewal rates increases your prices by at least 30% for one to three years.

While embarking on checking current deals may feel somewhat inconvenient once your contract has rolled over, you're unable to either switch or reduce your rates during this period.

Out of contract rates

Notifying your supplier of your decision to cancel your contract is the first stage in the switching process. Time limited personnel may not remember to enter negotiations for a new agreement.

Forgetting to renew automatically invokes uneconomical "out of contract" rates.

These changes offer more flexibility because you have the ability to move suppliers or tariffs at any time. The processing period could take up to six long weeks.

A step by step Guide to the switching process

Your ability to claim lower bills revolves around managing the renewal cycle that culminates after the important third stage. Below are the three main steps during the window of opportunity that arises towards the end of your contract.

  • 1) Ensure you terminate your contract within the timeframes stipulated (view example letters here).
  • 2) Get a range of current quotes and prices.
  • 3) Sign your new contract as soon as possible and within the time limits set by your current provider.

We forward all engagement letters to your office for approval that begin the day after the end of your existing agreement. Why not add a calendar reminder based on the new clauses you receive to manage the process next time?

Frequently asked questions

Q: When should I terminate my contract?

A: Termination windows vary from 90 days to 120 days depending on your supplier. Your current contract contains the specific terms of cancellation, or you can obtain them from your present provider. You can communicate your cancellation rights at any time during the termination window.

Q: What happens if I don't terminate?

A: If you forget to renew, you're placed onto rollover contract rates.

  • If I terminate and don't switch what happens? - You'll automatically switch to expensive out of contract rates.
  • I have other questions, what should I do? - Telephone our experts on 0844 4721 567 for advice.

Do you have an example of a renewal letter?

We received the following letter in our offices for our own electricity supplier. As highlighted, our rates would have been extremely expensive if we had accepted these conditions. Fortunately, we had already switched to a new contract at similar charges as the current year.

Renewing your fixed term electricity contract

Thank you for being a customer. We believe in delivering much more than just energy. We value your business and our products, services and customer benefits all reflect our commitment to putting our customers' needs first.

I am writing to let you know that we will be renewing your fixed term contract automatically for one year from midnight on 22nd January at the prices shown below. Your terms and conditions will also change. You don't need to lift a finger for continued peace of mind. Your contract will renew automatically, your prices protected, and your supply will not be affected.

Included in this letter are your statement of renewal terms. Please note, in the event that you decide that you do not wish to renew, you'll need to send us a written termination by email or post by no later than 23rd October. (Note: that was five weeks after we received the letter and three months before the end of the contract).

Your new prices

  • Standing Charge 37.18p per day
  • Unit charge 17.59p per kWh

I would like to end my fixed term contract

If you do not wish to accept these prices and you wish to end this fixed term, fixed price contract period, you need to send a written termination by email or post to the address shown. You can send your termination at any time but not later than 23rd October to prevent the contract from being extended for a further period.

If you send a termination letter to us but don't agree another fixed term contract with us, or arrange to change supplier, you'll be transferred onto our out of contract prices on 23rd January. This change means you could be paying more. Below are our current out of contract prices. You can find your profile class on your invoices, but if you're unsure we'll be happy to confirm it for you.

Our out of contract prices

  • Standing charge (01 - 04 profiles) 103.50p per day
  • Standing charge (05 - 08 profiles) 304.75p per day
  • Unit charge (01 - 04 profiles) 23.03p per kWh
  • Unit charge (05 - 08 profiles) 25.15p per kWh

Notes to this notice

Your profile class is the first two digits of your meter number. Most smaller companies will have 03 or 04.

There was no mention of our current prices, so a comparison was impossible. We signed a new deal at 10.8p/kWh and 21.2p/day that is 39% and 43% lower than the proposed charges.

Page last updated: 26th April 2016

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