Surface World January 2019 Surface World January 2019 | Page 46
ELECTROPLATING, ANODISING & GALVANIZING
As a business do you know the
difference between Rolled, Deemed,
Variable and Contract energy 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.
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.
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According to Ofgem, approximately
10% of micro-businesses are on
deemed contracts, on average,
80% higher than rates on
negotiated contracts.
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.
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?
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.
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 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.
Contact LSI Energy:
01727 877 020
[email protected]
www.lsienergy.com
This will depend on the
terms of your contract.
Many suppliers no longer
automatically renew
micro-business contracts
for another fixed-term
period, but move them
onto a Standard Variable
Tariff (SVT) requiring 30
days’ notice to leave.
JANUARY 2019
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