Avoiding Rollover Contracts in Business

Don't get Caught with Higher Tariff Rates

Traditionally SMEs would be automatically liable to commit to an additional term with increased prices of at least 35%. The industry terms these as "rollover contracts". If your original arrangement spanned three years, then another three-year obligation would be legally extended.

Legal Fixed-Term Contracts

As a legally bound transaction, it could not be amended under any circumstances, although we know of discretion cases in some situations.

Additionally, you would be required to provide a written termination notice of between eight and 12 weeks to make changes to your original agreement. This practice will now cease with all six main providers in terms of exit penalties although higher prices may still prevail.

Traditional Automatic Rollover Contracts No Longer Exist

British Gas was the first to announce changes to their practices on 24th July via their Twitter feed.

British Gas Rollover Announcement

The table below shows when each supplier will stop selling these types of extensions. Increases are still likely, so monitoring your conditions is still critical.

Supplier
New Customers
Existing Customers
British Gas
Sept. 2013
June 2014
Eon
April 2014
April 2014
EDF
Immediate
Immediate
SSE
April 2014
April 2014
ScottishPower
April 2014
Late 2014
nPower
April 2014
Nov. 2014

Contract Extensions are Now Often Flexible

Contracts will effectively continue to be rolled over on the following terms:

All customers should continue to monitor their contracts as a new variable rate tariffs could still be much higher.

How to Mitigate Potential 40% Annual Increases

Improvements through the OFGEM code of conduct have brought traditional rollover contracts to an end. There's now no automated renewal for an additional fixed term. However, all suppliers will effectively place you onto a new tariff that could increase charges by 35%-40%.

Your Negotiation Window of Opportunity

The good news is you can now immediately renegotiate terms and move with limited notice with the following provisions:

How Can You Manage This Process Effectively?

There are certain measures you can action to ensure you're placed on the most appropriate tariff each year. Below is our five-point plan that should be reviewed internally within your organisation at least every 12 months. If you can't find your original documents, contact your supplier or our team for further guidance.

If you need any help with managing this process, then please get in touch either through our contact form or telephone 0800 690 6508.

Deemed Rates

If you take over an existing business, the existing supplier will charge you their deemed rates before a change of tenancy comes into force. These are the highest fees charged in the market, and you should get new quotes as soon as possible.

Listed below are the current deemed rates charged by each supplier.

Supplier
Unit Price/kWh
Daily Standing Charge
British Gas
22.59p
90.0p
EON
10.00p
80.0p
EDF
17.45p
35.0p
SSE
26.50p
45.0p
nPower
24.35p
54.72p

With the current average tariff at 10.3p/kWh and 22p daily standing charge you can see just how expensive these charges are. If you have just undertaken a change of tenancy, it's critical you move off these tariffs quickly.

Out of Contract Rates

Similarly, if you're out of contract for any reason, then you're also placed on special "out of contract" tariffs. For example, you submitted your termination but didn't agree a new contract in time. The charges for British Gas are even higher than deemed rates.

Daily charges are 103.50p with 19.99p per kWh, which is five times a standard contract.

Review and Investigation Analysis

To avoid rollover contracts, deemed rates or out of contract rates, please contact us as soon as possible. Either call our team on 0800 690 6508 or enter your details on our online quote form, and we'll help you get on the right tariff for your business right away.

Prices graph

Your Peace of Mind

Ensuring you maintain visibility of your terms, protects you from falling into various pitfalls of commercially based contracts.

Rules dictate certain communication channels are open, but this affects a small proportion of UK businesses.

Setting up renewal reminders provides complete peace of mind and avoids above inflation rises.

Contact us today for further information.