Best Ways To Make Money

From 18th January 2010 - following a two year investigation by Ofgem - two million businesses should have been benefitting from greater consumer protection in relation to their electricity and gas contracts. However the new rules have created nothing more than greater confusion and a spaghetti junction of red tape. For example, not only does each supplier have a different ‘interpretation’ of the new rules but they’ve been told they only have to apply them to new business energy contracts and not those already in existence. Whilst one of the Big 6 suppliers has indicated that it will apply the rules retrospectively on all existing contracts, this still leaves the vast majority of business energy customers at the mercy of their current terms and conditions.

Business energy suppliers each have different T&Cs that can run to over 10,000 words in length and only allow customers to serve notice in narrow renewal windows that quietly open and close with months left to run on the contract. Anyone missing the renewal window is automatically denied the right to switch to the cheapest electricity supplier for at least another year. Our research shows that this ‘rollover’ technique catches out over 80% of businesses and is commonly used by energy suppliers to lock customers into much higher rates than those available to new customers/switchers.

One person who knows about ‘getting rolled’ first hand is Patrick Crawshaw, owner of the Bakehouse Company which runs Victorian-style tearooms in Edinburgh city centre. He knew his contract was coming to an end last April and so in January tried to terminate but was told by his supplier that they require at least 90 days notice and he was two, yes two, days too late. They offered him marginally better rates than his initial renewal offer but he was still left embittered by the experience which left him forced to into paying £452 more for the year than had he been able to switch. Patrick claims he never received a renewal letter and felt the practice was really underhand. When he tried to explain this to his supplier, their reaction was that ‘Everyone else is doing it’. Having found out the hard way, Patrick was not about to let the same thing happen again this year and so he made a New Year’s Resolution to serve notice well in advance of his next contract end date in April.

A further area of confusion of the new rules is the size of business to which the new rules are restricted, should they wish to compare business electricity prices. Ofgem uses the description ‘microbusiness’ but then offers several definitions. These include: businesses employing fewer than ten people, with an annual turnover of less than 2 million euros, or energy use of less than 200,000 kWh of gas a year or 55,000 kWh of electricity a year. Again, some suppliers are rigidly applying these definitions whilst others will consider SMEs of all shapes and sizes as qualifying for the new rules.

We are getting very mixed responses from suppliers, many of whom are still trying to fathom out the new rules themselves. It would be so much simpler if, rather than just guidelines, these new rules were set out more clearly and more strictly imposed.

Business electricity prices currently range threefold from around 7p/kWh to 21p/kWh and 2p/kWh to 6p/kWh for business gas prices but anyone looking to stay on the lowest prices has to be prepared to switch regularly.

Jonathan Elliott is Managing Director of Make It Cheaper, the UK’s leading independent price comparison and switching service for business electricity & business gas, offering massive cost savings on business electricity prices & business gas prices.