Kick-off for a more competitive energy market – the end of auto-rollover contracts?

  • Competition Market Authority Report

Kick-off for a more competitive energy market – the end of auto-rollover contracts?

By |2017-12-19T15:12:08+01:00June 9th, 2017|Energy, Regulations & Policy|

There are some big changes afoot in the SME energy market at present with the Competition and Markets Authority’s “remedies” starting to take effect over the next few weeks.

One of the biggest changes will affect rollover contracts and the window you are allowed to terminate your agreement. OFGEM has already implemented some improvements in this area over the last few years but the CMA doesn’t think they went far enough.

What is the current situation?

This is great news as there are still some suppliers out there that will use the current rules to make it very difficult for a customer to terminate their agreement, methods such as only allowing the termination notice to be applied during a certain window or having had to receive it by a certain point are all common practice.

Auto-rollover contracts have already become a thing of the past for the “Big 6” and some selected others but there are still suppliers out there who will place a customer into another 12 month contract if they miss the window to terminate, and at rates that are not market competitive. Well not anymore!

What is going to change?

  • “Micro businesses will be allowed to send in termination notice at any point until the last day of an initial fixed term period contract”.

This puts the power of choice very much in the hands of the consumer and will not only result in a more flexible transfer process but far less complaints for suppliers exploiting the regulations currently in place.

  • No supplier will be allowed to roll a customer into a new agreement longer than 30 days.
  • The new agreement must be on to their variable price plan and not the “deemed” rates that are massively over the current market level.

Variable rates will still be higher than a standard contractual tariff but not nearly as bad as the historic deemed rates applied by some suppliers.

These changes must be applied to all existing contracts as well as new contracts moving forward from the 23rd of June. These are hugely positive changes for the SME sector and we support them fully.

If you think that this is something that could affect your business and would like to find out more, please do not hesitate to get in touch with us!

About the Author:

Jonathan Reeves