Surface World August 2018 (Show Guide) Surface World Aug 2018 - Page 102

ENERGY LSI Energy offer advice on commercial energy contracts Do you know the difference between Rolled, Deemed, Variable and Contract energy prices? It is important that companies, 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 ensure your business does not become a victim of suppliers’ terms and conditions in regards to expensive out of contract rates. 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: 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. 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. 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. for another fixed-term period, but move them onto a Standard Variable Tariff (SVT) requiring 30 days’ notice to leave. Also referred to as ‘out-of-contract’ rates, deemed contracts can considerably push up business energy bills. For many business struggling with cash flow and budgets, paying ‘above the odds’ for energy bills could be irreversibly crippling. If you don’t agree a new fixed-term period or switch to another supplier, they will continue to supply you, usually at higher prices. You may still have to give notice and pay any outstanding debt before you can change supplier. 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 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 will in advance of Fixed Plans expiring. In summary what happens at the end of my contract if I don’t contact my supplier? This will depend on the terms of your contract. Many suppliers no longer automatically renew micro-business contracts 100 SHOW GUIDE - AUGUST 2018 Some suppliers still automatically renew business contracts onto a new fixed-term for a maximum of one year. You should check the terms and conditions if you’re not sure, as you may not be able to switch until the end of the new fixed-term, or have to pay an exit fee if you want to terminate the contract early. Prices for automatic renewals whether SVT’s or Fixed Term are usually higher than if you negotiate a contract, so you should contact LSI Energy to check if we can negotiate you a cheaper deal. 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 mus