OFGEM Offers Support to Small Businesses

Following a probe by OFGEM (the energy industries regulator) new rules have been introduced for energy suppliers of business electricity and business gas to micro business.

OFGEM has classed micros business as companies with less than 10 employees and a turn over of less than 2.3 million pounds per year.

The new rules which come into effect from the 18th January 2010 are below:

o Highlight the key terms and conditions available to small businesses at the time of sale, and provide full terms and conditions in writing.

o All door to door sales and verbal contracts to be followed by full written terms and conditions.

o Energy suppliers will only be able to automatically roll over business electricity and gas customer contracts for a maximum of 12 months

o All small business will have the option on the contract to opt out of a contract roll over in the future.

o Small business will no longer have difficult terms and conditions regarding terminating supply contracts. All suppliers will have the same terminations policy.

o All business electricity and business gas suppliers will write to customers at least 3 months before the end of the contract advising of future rates and what to do if they wish to leave the supplier.

Small businesses have historically struggled with knowing when to terminate their energy contracts. Which has led to many businesses having to deal with being rolled on to higher energy contracts for 2 or 3 years? The new rules have given business a much larger window of when they are able to terminate their supply agreement. The new rules of when a termination can be forwarded to a supplier are between when the contract is signed up to 3 months before the contract has ended.

OFGEM will audit all business electricity and business gas suppliers to insure they are following the rules. OFGEM has warned energy suppliers that they will face heavy fines if they do not follow the rules.