In a rare instance of an industry regulator showing its teeth, Ofgem has recognised the abusive relationship some of the electricity and gas suppliers have with their business customers, and introduced new rules governing the power barons' behaviour.
But while that's admirable, the regulations apply only to new contracts started after January 18 this year they will not apply retrospectively to existing contracts.
Additionally, they will apply just to micro-businesses, defined as a those which:
Employ fewer than 10 full-time staff
Have an annual turnover of less than £1.8m
Use less than 200,000kW/h a year (gas) or 55,000kW/h a year (electricity).
Larger c-stores, and those with high lighting and refrigeration demand, will fall outside this definition.
The changes give businesses the following protection:
Before entering into a contract a customer must be informed of the key terms and conditions
Within 10 days of the contract being agreed the customer should receive hard copies of the full terms and conditions and a statement of renewal terms if the contract is a fixed length
Customers will be contacted a minimum of 30 days before the end of the contract period with an explanation of the options available and advice on what a customer should do to terminate their current contract and stop the supplier from assuming contract renewal for a further fixed-term contract period
Customers at any point from when the contract is agreed until the end of the notice period can give notice that they wish to terminate it at the end of the fixed-term period.
This increased transparency should help prevent store owners from being rolled over onto long-term contracts at a high tariff simply because they missed the date to give notice of termination. While consumer champions such as the Energy Advice Line believe Ofgem should have gone further and banned this 'assumed renew' tactic, the new rules should give stores fair warning that it's time to renegotiate their contract.
Convenience Store is concerned that a number of our readers are still open to abuse from power companies. We would like to see Ofgem extend the protection to all businesses with fewer than 250 employees, and we'll continue to pressure the regulator to recognise and outlaw the questionable tactics the suppliers use on all their small business customers.
To do this we need to gather evidence of abuse, so if you are involved in a contract wrangle with your energy provider, we need to hear from you.
But while that's admirable, the regulations apply only to new contracts started after January 18 this year they will not apply retrospectively to existing contracts.
Additionally, they will apply just to micro-businesses, defined as a those which:
Employ fewer than 10 full-time staff
Have an annual turnover of less than £1.8m
Use less than 200,000kW/h a year (gas) or 55,000kW/h a year (electricity).
Larger c-stores, and those with high lighting and refrigeration demand, will fall outside this definition.
The changes give businesses the following protection:
Before entering into a contract a customer must be informed of the key terms and conditions
Within 10 days of the contract being agreed the customer should receive hard copies of the full terms and conditions and a statement of renewal terms if the contract is a fixed length
Customers will be contacted a minimum of 30 days before the end of the contract period with an explanation of the options available and advice on what a customer should do to terminate their current contract and stop the supplier from assuming contract renewal for a further fixed-term contract period
Customers at any point from when the contract is agreed until the end of the notice period can give notice that they wish to terminate it at the end of the fixed-term period.
This increased transparency should help prevent store owners from being rolled over onto long-term contracts at a high tariff simply because they missed the date to give notice of termination. While consumer champions such as the Energy Advice Line believe Ofgem should have gone further and banned this 'assumed renew' tactic, the new rules should give stores fair warning that it's time to renegotiate their contract.
Convenience Store is concerned that a number of our readers are still open to abuse from power companies. We would like to see Ofgem extend the protection to all businesses with fewer than 250 employees, and we'll continue to pressure the regulator to recognise and outlaw the questionable tactics the suppliers use on all their small business customers.
To do this we need to gather evidence of abuse, so if you are involved in a contract wrangle with your energy provider, we need to hear from you.
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