Surface World February 2020 Surface World February 2020 | Page 74

ENERGY WE ARE AT SURFACE WORLD LIVE 2020 Rolled and deemed contracts versus contracted prices It is important that businesses, micro-businesses in particular, are aware of the terms and conditions of their energy contracts. Accidentally entering a rolling contract can leave your business considerably out of pocket. LSI Energy are available to assist to ensure your business does not become a victim of suppliers’ terms and conditions in regards to expensive out of contract rates. The contract a business is rolled onto is typically poor value for money and the business is likely to be stuck on this tariff for at least a year. It’s vital that a business is conversant of the types of contracts and the terminology used to describe the different energy contracts. LSI Energy offers an explanation of each: Also referred to as ‘out-of-contract’ rates, deemed contracts can considerably push up business energy bills. For many businesses struggling with cash flow and budgets, paying ‘above the odds’ for energy bills could be irreversibly crippling. Rolled contracts Rolled energy contracts are expensive and businesses should do their best to avoid them. A rolled contract is the term used to describe a business energy contract that automatically renews when a contract is ended. 72 Deemed contracts A deemed energy contract is usually put in place when a customer moves into new premises and begins to consume electricity, gas, or both, prior to agreeing a contract with a supplier. A deemed contract can also occur when an existing contract comes to an end, but the customer continues to use energy. This usually occurs when the original contract fails to expressively state what is to happen when the contract ends. According to Ofgem, approximately 10% of micro-businesses are on deemed contracts, on average, 80% higher than rates on negotiated contracts. Variable Price Plans Businesses should be aware that going on a Variable Rate Plan will mean the tariff is linked to market activity, meaning unit prices can go up or down. Like a Variable SHOW GUIDE 2020 Mortgage plan, unit rates may fall alongside market activity with a Variable Rate energy plan, meaning you pay less. However, if market activity causes unit rates to rise, you’ll end up paying more. Generally speaking, Variable Rate Plans work out more expensive than fixed-term rates. When a Fixed Price Plan comes to an end, failing to take any action, will mean that Variable Price Plan rates could be applied to your business energy bills. As Variable tariffs typically work out more expensive, it’s important that you review your plan well in advance of Fixed Plans expiring. If you don’t want your contract to be automatically renewed for another fixed- term, you can send notice to your supplier from day one of the contract, but you must act to negotiate a renewal contract once it has ended or the automatic pricing mechanism will kick in – another area where LSI Energy can assist. In short, the best way to avoid receiving grossly higher business energy bills is to ensure your business is organised with its energy requirements. LSI Energy are available and our contract assessment and reminder service is free of charge for businesses. Don’t miss out on this opportunity and ensure your business energy contracts are in good hands. Telephone: [phone] Email: [email protected] Visit: www.lsienergy.com twitter: @surfaceworldmag