Time for action on power bills

It’s not illegal. It’s not even sharp practice. And you can’t say you weren’t warned.

But over the course of the last twelve months the UK’s gas and electricity suppliers have taken millions of pounds out of c-store retailers tills which you didn’t need to give them – and all because you were too busy to tell them not to.

For the past six months Convenience Store has been urging our readers to change their power supply contracts at the earliest opportunity, to prevent the supplier invoking a clause which will tie you to them for years to come, at a much higher tariff than you paid in the first year. Now, as a final reminder, we’ve named May 1 as Cancellation Day to prompt you one final time to write the one letter a year that will save you thousands of pounds.

This assumptive renewal or ‘rollover’ clause is a standard feature of power contracts which are designed to offer attractive low rates to new customers but then rely on busy business owners to forget to give notice that they will terminate and renegotiate their deal when the initial term expires.

The suppliers offer a termination window – in some cases 90 days before the contract term ends, in others shorter – in which you have to inform them that you don’t want to pay the higher rate as outlined in the small print of your original contract. Miss that and you could lose thousands of pounds over the next few years, money that comes straight off the bottom line and could mean the difference between life and death for struggling small shops in the current economic climate.

Judging from the experiences of our readers, we estimate that each store that receives Convenience Store could save as much as £3000 a year by regularly scouring the market for new deals. That’s a phenomenal £126m of your money staying put in your pocket where it belongs.

Unfortunately the power suppliers haven’t always been entirely helpful in reminding you when your contract is due for renewal. Time and time again we’ve heard tales from retailers who say they never saw a renewal letter, or that it arrived after the termination window had closed, or even that it was sent to the wrong address.

The major player in the power game all say they are keen to help their customers reduce their bills. They offer help and advice on conserving energy and stress the environmental benefits of switching off lights, shutting doors and  turning down the heating. 

But while they’re keen to discuss these initiatives, they’re less keen to endorse our campaign which would create 42,000 new energy customers a year, increase competition in the market,  and result in a fairer deal for retailers. That’s a shame, as that endorsement would show once and for all which suppliers really are committed to reducing their customers’ bills.

We’re not alone in identifying rollover clauses as a cause for concern. Energy regulator Ofgem included a potential ban on them in a range of recommendations to deal with what it called the ‘undue discrimination’ that small businesses receive with their energy supply. 

Ofgem’s involvement is welcomed by Association of Convenience Stores chief executive James Lowman. “We are delighted that Ofgem has listened to calls for action to address the serious problem of roll-over energy contracts,” he says. “These are one of the worst problems local shops face when dealing with energy suppliers. This measure will go some way to protecting smaller businesses from inappropriate and high cost contracts.”

“Banning these contracts will force energy suppliers to be more open in their dealings and give retailers back more control over their energy costs and supply arrangements,” he adds.

ACS will be looking to Ofgem to deliver on its proposals, he says, adding he would like to see them go further to ensure that retailers can no longer be “bullied or locked into contracts that are not right for them and they cannot afford.“ It’s possible that a change could be introduced later this year, and with your help C-Store will continue the Fight the Power campaign to ensure that happens.

Save £ thousands now
What you need to do:

Dig out your gas and electricity contracts and check when they’re due to end. Also check how much notice you are required to give. Write both dates in your diary.

Once the notice period begins, check your contract for the details you need to send in order to terminate your deal. Put your notice in writing – you may want to send it recorded delivery.

Speak to your current supplier and tell them you won’t be renewing. Chances are they will offer you a much better deal to keep your custom, so keep saying ‘no’ until you’re happy with the new arrangement.

Contact other suppliers direct, or use a comparison service. Your choice of suppliers will vary according to your location, but don’t be afraid to play one off against another.

Don’t get caught ‘out of contract’. Your supplier will charge you a punitive tariff.

See our list of questions to ask a new supplier – and check your contract thoroughly before you agree to a long-term deal.

Put the notice of termination date in next year’s diary!

 

Paying the price
Cautionary tales from the ‘rolled over’ retailers

Dave Newman, Westhill Stores, Hastings
When Dave’s bill arrived last summer he found his unit rate had increased by a startling 93%. When he called his supplier he was advised that he had failed give 90 days notice to terminate his contact, and it had automatically rolled on for another 12 months at what he describes as ‘extortionate’ rates.
“I feel extremely frustrated by the whole saga, as after 17 successful year retailing, I have never been sucked into any of the scams that have caught other retailers out,” says Dave. “I know I only have myself to blame and this mistake will cost me in the region of £10,000.  The only saving grace is that some of my fellow retailers on reading of my demise, will check their contracts carefully and if in time give their energy suppliers notice of termination.”

Chris Pollard, Barlby Village Stores, Selby
Until Chris’ three-year power contract came to an end last year he was paying £850 a month – but suddenly his bills shot up from 4.5p to nearly 15p per kW/hr. “I found that I couldn’t get out of it because of the three month notice rule and I only realised this when they sent me a letter explaining it - inside the three month period,” he says. “I sent a termination letter but only two and a half months out instead of three. They wouldn’t accept it.”
“My bills are now £2720 per month and I have had to cut staff hours to contribute to this. I don’t know how long I will be able to carry on paying this - it is crippling me.”

Roger got an electric shock when his night rate doubled and his day rate went up by 60%. “I got caught because I missed the 90-day cancellation deadline by 15 days. And there’s nothing I can do about it. I know the market, but I still got caught,” he says.
Roger did manage a bit of bartering. “It went up by about £700, but I did some pleading on the phone and managed to get it down to £400.”
His message to Convenience Store readers is: “Once you’ve read this, go and cancel your contract, before you have a cup of tea or sack a member of staff!”

Kully says she sent in notice last summer by recorded delivery that she wished to end the family’s stores’ contract in September. So they were shocked then when they found that their bill shot up in February to £9,500 instead of a usual £3,500.
When they contacted their supplier they were told that they had been informed of this increase in writing. “They accepted that we had given notice,” says Kully, “but when I asked them to email me a copy of the letter with the increase it had been sent to the wrong address and had the wrong name.” They have never had a problem with bills going astray, however.
Kully went for help to watchdog Consumer Direct, but was told that, as the family employed more than four people, it didn’t qualify as a small business. She eventually managed to renegotiate the contract, but only after agreeing to pay the initial inflated bill.