The problems I find with big energy companies, is little micro-businesses are not of great importance to them financially. Energy companies are seen as locking smaller firms into un-negotiable high tariff contracts where it is made almost impossible for them to switch to cheaper energy tariffs. This is because they were not made aware of their upcoming renewal date. Meaning the contract simple rolls over and firms are almost forced into taking the same contract (just highly more expensive) for an additional minimum of 12 months.
?82 per cent of respondents said they would support the abolition of rollovers.'
Is this fair? No not really, but energy companies may argue, it is for the individual businesses to recognize the contract end date and take responsibility. But for micro-businesses with few employees, this may not be top of the agenda as well as being highly time consuming.
FSB research has found that one in four small firms had been rolled over without their knowledge and an overwhelming 82 per cent of respondents said they would support the abolition of rollovers.
In this current economic climate it is vital for smaller companies to be able to save money where they can. It seems to be the case, to stay afloat they must be able to reduce cost at any opportunity necessary.
Caroline Lucas, MP for Brighton Pavilion, states how ?It?s deeply unfair that, while micro businesses often consume products and services in a similar way to domestic consumers, they do not enjoy the same level of regulatory protection.? She goes on to say how ?This leaves them vulnerable to being ?rolled over? from their current energy contract into a new one without their knowledge ? making it impossible for them to negotiate a better deal for another 12 months.?
?79% of businesses stating they had never received or couldn?t remember receiving a renewal letter from their energy supplier.?
This is where either an energy consultancy or someone within the business who know about energy/ tariffs and bills; and are proactive about shopping around, can make sure the business can obtain the best deal possible, without being cornered into a contract they didn?t want or ask for. But with ?79% of businesses stating they had never received or couldn?t remember receiving a renewal letter from their energy supplier.? January 2012 With this being true, there is no surprise that companies are missing their renewal window.
Ofgem have revisited this reoccurring issue a number of times and a number of factors have been changed to allow a clearer view to companies as to when their contract is coming to an end. This makes sure letters are send out to companies before the renewable date.
But with issues such as the letter not arriving to the right person on time. Additionally, sometimes the renewal letter states that you should serve notice of termination in the next fourteen days from the date of the letter but once the letter has been past onto the right person in charge; those two weeks quickly pass. Which means micro-businesses are tied into these higher-rate contracts with no leeway to lower the rates.
It is abundantly clear to me that changes have to be made to the rollover contract system with both the energy industry and the micro-businesses. Letters need to be clear, with termination dates stated clearly and letters sent with longer notice of the termination date. However, businesses need to be more organised too, making note of termination dates, planning in advance/ shopping around for contracts which they can compare and contrast in order to find the best possible rates to try and avoid loosing out on a better deal.