From what was originally conceived as a new type of contract to make life easier for both parties we are now left with agreements tipped wholly in favour
of the supplier.
Electricity4Business’ Marketing Director Graham Paul argues that truly competitive suppliers are being locked out of a large part of the market despite
offering cheaper prices and far more favourable terms. ‘If we can offer some of
the cheapest business electricity prices in the market’ says Paul ‘whilst
maintaining the customer’s choice to move should he so wish then those who are
renewing customers at rates twice as much as ours should at least allow the
customer to make his own decision.’
But there is light at the end of the tunnel since it’s often said that what happens in the U.S. is mirrored in the U.K. after a short period.
Some U.S. states, amongst them the powerful State of New York, have sought to redress the balance with evergreen contracts by imposing strict controls on
their terms and conditions. New York General Obligations Law 5-903 prohibits the
automatic renewal of contracts unless the customer is provided with notice by
certified mail at least 15 days and not more than 30 days prior to the time
specified.
The state of Alberta in Canada protects the customer still further. The first bill you receive after the contract has been renewed must clearly and
prominently state that the marketing contract has been renewed and state the
price you will be charged for your supply of energy. You have 30 days after
receiving this first bill to cancel the renewed contract without cost or
penalty.
Energywatch Cheap Air Max 93 , the U.K. regulator, is now clearly onto the case. Following complaints from many small businesses it wants to ensure that where
evergreen contracts are chosen ‘that these commercial arrangements are fair and
clear and do not have the effect of preventing consumers from moving supplier at
the end of a contract where they choose to do so. We are concerned that this
trend is having the effect of further reducing consumer choice.’
For this reason Energywatch has sent a full questionnaire to all business suppliers requesting their response to a series of questions relating to this
issue along with copies of their full terms and conditions. Responses are
required by early November 2006 after which Energywatch will evaluate the
responses and propose a set of guidelines for suppliers which will cover
supplier processes, consumer communications and contract terms.
Ofgem Cheap Air Max 90 , the energy industry regulator, says that annual customer switching rates are at the highest ever with 5 million switching to
cheaper electricity and 4 million gas customers – that’s more like 20%.
Why the big disparity between households and business? You would have thought that the downturn would mean that businesses could not afford to be so
complacent and that they would be looking for every opportunity to save –
including via business electricity cost comparison. Certainly a recent survey by
the Major Energy Users Council would suggest that was the case. It found that
uncertain and volatile energy prices were the number one concern and that lack
of competition among business electricity providers was close behind.
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Ofgem’s Key Questions For Business Electricity & Gas Customers
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