User:Simon Jacy/sandbox/Deemed contract

Deemed Contracts

When a fixed-term business energy contract ends but a consumer is not 'rolled onto' another fixed-term contract, instead of cutting supplies, an energy provider will tend to put customers on deemed contract. These do not have restrictive long fixed terms but the tariffs are much higher than standard rates.

Commercial use

UK energy industry watchdog [[1]] says<ref>Energy contracts for businesses<ref>that deemed contracts cost an average of 80% more than rates charged in a negotiated contract. According to Ofgem<ref>https://www.ofgem.gov.uk/information-consumers/business-consumers/energy-contracts-businesses<ref>, around 10% of micro-businesses are on deemed contracts. (The definition of ‘micro business’ is important: this applies if you have fewer than 10 employee, turn over less than €2 million, or use 100,000 kWh of electricity or 293,000 kWh of gas per year.)

Impact on UK SMES

Research by UK business price comparison website SwitchMyBusiness.com<ref>https://www.switchmybusiness.com/articles/new-research-proves-great-uk-business-energy-rip-off/<ref> found that more than 30% of small businesses have been shunted onto a deemed contract and 18% have been ‘locked-in’ to a fixed-term contract without their permission. This stems from the fact that over half of smaller business do not understand their energy contract.

Deemed contract rights

As Ofgem explains,<ref>https://www.ofgem.gov.uk/information-consumers/business-consumers/energy-contracts-businesses<ref> the suppliers of businesses on energy deemed contracts must:

• take “all reasonable steps” to provide you with information including the charges or fees
• provide you with a copy of the full contract if you ask for it
• take “all reasonable steps” to tell you about other available contracts
• take “all reasonable steps” to ensure that the terms of the contract are not “unduly onerous”.

If you are on a deemed contract, energy suppliers cannot:

• prevent switching to another supplier, for any reason or at any time, (i.e. they cannot object to transferring for reasons of debt or contract)
• require notice before terminating the contract or charge you a termination fee.

While these are the most important points, Ofgem has a longer document outlining your full rights.<ref>https://epr.ofgem.gov.uk/Content/Documents/Electricity_supply_standard_licence_conditions_consolidated%20-_Current%20Version.pdf<ref>

Changes to deemed contract rights

Ofgem now requires suppliers to put the end date and notice period on all bills for fixed-term contracts. Small businesses are permitted to tell a supplier that they want to switch at the end of their deal at any time before the notice period. Changes introduced by Ofgem on 30 April 2015<ref>https://www.ofgem.gov.uk/ofgem-publications/91591/autorolloverdecisionletter.pdf<ref> require suppliers to:

• allow micro-business consumers to give notice to terminate a contract no more than 30 days before a contract ends
• provide current prices and annual consumption details on renewal letters for micro-business fixed-term contracts
• acknowledge a termination notice from a micro-business consumer within five working days of receipt, or as soon as reasonably practical after that

References

https://www.ofgem.gov.uk/information-consumers/business-consumers/energy-contracts-businesses

External links

• [2]