Businesses call for end to energy ‘rollover’ contracts

bulram | February 26, 2013

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The Federation of Small Businesses wants Ed Davey, the Energy Secretary, to go further for small business and end the automatic rollover process currently in place. Green Party MP Caroline Lucas is supported by the FSB in her proposal to limit the rollover period from a year to 30 days.

Though defeated in her attempts to create a bill protecting the smallest of businesses with less than ten employees, she shall continue to campaign for this change with the support of the FSB.

The FSB is also considering talks with the climate change leader Greg Barker, who is said to be considering the argument against the rollover issue. The research undertaken by FSB discovered evidence suggesting major energy companies had automatically rolled the contract over without contacting the businesses, or allowing them to shop around for alternative business.

A spokesperson for energy comparison experts Make it Cheaper has said:

“This topic has been long-debated with a full review coming up next on Ofgem’s to-do list and it’s even the subject of a Parliamentary Bill.

“Our view on that is that no business likes being rolled onto more expensive contracts but the alternative for the vast majority – that are not actively managing their energy contracts – is to end up on ‘Deemed’ rates when the existing contract comes to end.

“This scenario is a far worse fate as you can see from these typical business energy rates:

	Acquisition/Retention	Rollover	Deemed
Electricity	10p/kWh	14p/kWh	17p/kWh
Gas	3.5p/kWh	4.5p/kWh	5.5p/kWh

“We welcome Ofgem’s forthcoming Rollover contract review,” the spokesperson continues, “but we also know from Ofcom’s decision to do away with Automatic Renewing Contracts on 1st January 2012 that any potential benefits to the consumer can take years to filter through because of

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pre-existing fixed term contracts taking precedence.

“Meanwhile the ‘elephant in the room’ – which is that too few businesses are proactively engaging in the market – is being overlooked. We believe that engagement, rather than regulation, will be a faster and more effective route to happier SME energy procurement and are working with suppliers such as E.ON and CNG to voluntarily improve and promote customer engagement. “