Small firms urged to ignore ‘win-back’ energy contracts
June 4, 2007
Energywatch, the independent energy watchdog, is warning small businesses to ignore ‘win-back’ energy contracts or risk facing court action.
The warning comes after it emerged that British Gas routinely offered former business customers cheaper, ‘win back’ contracts, once the customer had signed a deal with a new supplier.
"There is a legal duty on small businesses to be aware of their supplier contracts. Once businesses have agreed the terms of a new contract, they are not open to win-back opportunities from previous
suppliers," said Energywatch business services manager Paul Savage.
"Increasing numbers of business customers are finding themselves with two contracts from energy suppliers. Under UK contract law, this is not allowed. If businesses are in breach of their contract terms, suppliers are entitled to take them to court or apply penalties," he added.
In response to concerns from rival firms that British Gas acted unfairly, Ofgem, the energy industry regulator, has launched a consultation into the renewal of energy contracts. Small businesses are invited to submit their views before the 31 May deadline.
"We recommend businesses exercise their right to find the best deal by visiting a range of supplier websites, which often have sections dedicated to small businesses," advised Savage.
Before moving to a new supplier, businesses have a five-day objection window in which their current energy supplier can make them a better offer.
"Small businesses also need to beware that they are not being tied into ‘evergreen’ contracts, where terms are renewed automatically unless firms object," warned Savage. "For example, businesses might be sent a letter four to six months before their contract ends explaining their contract will be renewed, unless they write to cancel it."
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