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It happens to all of us: half way through a contract, and you realise you’re paying over the odds.
Or maybe your supplier is nothing but trouble. Either way, you want out, and you want out now.
Unfortunately, getting out of a business energy contract isn’t always easy. However, Ofgem are working on making things as simple as possible for businesses.
Business energy tariffs last between one and five years, although the most common length is two years.
Once your business energy contract is up, suppliers will put you on so-called ‘out of contract rates’. These rates will continue until you tell them otherwise. As sorting out energy bills tends to come at the bottom of a never-ending to do list, many businesses end up paying out of contract rates for years. The problem? These rates are terrible value. Really terrible. Even if you use a really small amount of energy you should be avoiding out of contract rates like the plague. The fact that suppliers do little to get people off these rates is a source of constant controversy, and something Ofgem is trying to deal with.
Despite the bad press that suppliers get, lots of businesses are quite happy with their current provider – if they keep the lights on and charge you a fair amount, why bother looking elsewhere?
The fact is that if you don’t compare the market you’re missing a trick. The supplier who was best value when you took out your contract may not be the best value now, and you’ll never know if you don’t check. Even if you don’t change supplier, brokers such as ourselves can often save you money on a new contract with your existing supplier, as well as providing you quotes from up and coming contenders that you may not have heard of. Whilst it’s always good practice to check reviews before you leap into a fixed contract, we only work with people we trust – meaning if a company is renowned for poor service, we won’t recommend them to you.
If you want to switch energy supplier before you enter your ‘switching window’ (the period during which you can let your supplier know you want to switch), you’ll probably have to pay a sizeable cancellation fee. There is, however, a chance that this could be outweighed by the savings you make, so it’s always worth checking.
If you’re a micro business, you benefit from some extra protection – you can give a termination notice at any point throughout your contract, although your switch won’t actually occur until after your contract has finished. Additionally, if you miss your contract end date, you’ll have 21 days to find a new supplier before your existing provider moves you onto out of contract rates.
|Out of Contract||Any time – you are no longer in a legal contract|
|Micro Business (up to 10 employees)||You can let your supplier know of your intention to switch at any time, however the switch won’t occur until your contract is up.|
|SME||Your switching window will be a minimum of 120 days before your contract end date. Suppliers often ask for at least 30 days notice before you switch.|
|Large Business||Your switching window will be a minimum of 120 days before your contract end date. Suppliers often ask for at least 30 days notice before you switch.|
There is a way around this, especially if you use a lot of energy. Larger suppliers buy their energy far in advance, meaning you may be able to lock down a price well in advance of your contract starting.
If you’re moving into new premises you can organise an energy contract ahead of time – you just need to know the date you’ll be moving. If you don’t arrange a new contract, you’ll end up on deemed rates – which are basically out of contract rates by another name and are similarly expensive. Luckily, you can terminate your deemed contract at any time. Click here for more information on deemed and out of contract rates.
Our energy experts have an in depth knowledge of the whole market, including up and coming boutique suppliers and renewable energy only companies. They also have excellent persuasion skills when negotiating rates on your behalf! If you aren’t yet in your switching window, but want to see if you can arrange for a switch in advance, we can advise you on your best options.
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