If your energy deal isn’t cancelled or renegotiated before its end-date, your supplier may automatically ‘roll over’ your contract, meaning you’ll be paying a higher rate for your gas and electricity. This is called a rollover contract.
That’s why it’s important to have a handle on the terms of any energy contracts you sign up for, and set a reminder for when they are due to expire.
Being shifted on to a rollover can cause problems for a businesses of any size, as energy charges are likely to be set at a much higher rate than what you were previously paying, and the terms often prevent you from switching to a better-priced deal.
If an energy contract gets rolled over, and you sign up to a new deal with a new supplier, the current supplier will object to the plan transfer as it technically constitutes a breach of contract, even if you were unaware you’d been rolled over.
Ofgem regulations require business energy suppliers to highlight the important terms and conditions of each contract before any agreement is signed, to make sure customers are aware that the contract is binding, and avoid hidden charges, costs or triggers within long-term deals between customer and supplier.
Business Energy suppliers are now obliged to send written confirmation of the contract, within 10 days of the new contract or renewal contract being agreed, meaning you will now have a hard copy to study and keep for future reference.
At least 60 days before a fixed business energy deal is due to end, your supplier must send you a statement containing the renewal terms, in which the supplier must also explain if the contract will automatically be rolled over if no action is taken, and suggest how you can prevent being rolled over. Automatic business energy contract renewals are avoidable, you just have to know the processes.
Even so, many businesses remain unaware of when their current contract is due to end, which leaves them open to automatic, and potentially more expensive business energy rates.
Rollover contracts for small businesses can be a major headache, particularly if margins are tight and energy costs suddenly and unexpectedly shoot up. Simply setting a reminder can help massively when dealing with the admin of contracts, and also allow you to assess your options and shop around using an energy price comparison service, such as UKPower.
Rollover costs for large businesses are just as important because costs are generally much higher due to the added power needed to run large and industrial business sites.
Business energy suppliers have varying termination notice periods, ranging from 30 days to 120 days, and we advise you make sure you’re aware of how long a termination period your supplier needs to avoid being rolled over.
What many businesses don’t realise is that it’s possible for businesses to sign a new contract with a new supplier up to three months before the end of their current contract. Doing this means you can have a seamless transfer at the end of your initial contract and catch the benefits of better rates and a plan more in sync with their needs.
At UKPower, we’re dead against rollover contracts, and don’t think they act in the best interests of our business – while it’s vital your supply isn’t cut off, it’s unfair that suppliers can tie you into an inflated rate for another year.
So our energy experts have produced a checklist designed to help you when signing a new business energy contract:
To ensure you don't get rolled over into a new, more expensive energy contract, contact one of our Business Energy Advisors on 0800 326 5517 or use our online business energy comparison service.