Ofgem Condition 7A
Ofgem have announced new regulations, starting from 18th January 2010, to protect small businesses from being stung by their energy contracts being automatically rolled-over by their supplier.
Ofgem have determined that the smallest businesses – which they have named “micro-businesses” will be protected with the new measures they have put into place.
What makes a business a micro business?
Your company qualifies as a micro business if:
- Your business uses less than 55,000kWh of Electricity a year.
- Your business uses less than 200,000kWh of Gas a year.
- Your business has less than 10 employees (or their full-time equivalent) and an annual turnover or annual balance sheet total not exceeding 2m euros.
Only one of the above criteria is required for your business to be classed as a micro-business.
What are the new rules and how do they protect micro-businesses?
When entering a new contract:
- Your new supplier must explain the key terms and conditions of your new contract before you sign.
- You should receive written hard copies of the contract and the terms and conditions usually within 10 days.
This means you shouldn’t miss any terms or clauses hidden in the small print of the contract.
Previously some customers would not receive this information and would therefore be unaware of the contract roll-over clause.
At the end of your contract:
- You should receive a statement of renewal terms approximately 60 calendar days before the end of your contract (this can be up to 120 days).
- You will then have a 30 day notification window to contact the supplier if you wish to switch or negotiate a new deal.
- If you do not contact your supplier during this window your contract can be rolled over for a maximum length of 12 months.
- If you wish to prevent this from happening, you can write to the supplier at any point from when you agree the contract to the end of the notification window. However, you must do this in accordance with the terms of the contract.
Other advice for micro-businesses
Ofgem states that third party intermediaries (TPIs), such as brokers, provide a useful role in helping micro-businesses to compare energy deals. However, Ofgem’s probe showed that some businesses are uncertain about which suppliers are represented by TPIs and how they are funded.
Ofgem has recommended that brokers take steps to improve customer confidence. Ofgem have proposed that brokers should promote existing or new codes of practice, and brokers should be required to explain how they are funded.
We promote our code of practice and make it freely available to all of our customers. We are an accredited member of the Utilities Intermediaries Association (UIA), who require their members to operate under a strict code of practice at all times.
We will also happily disclose how we are funded to you should you request it, and also the fee we receive for any contracts you negotiate with us.