Letters of Authority – Why should I sign one?

A Letter of Authority (or LOA) is primarily for brokers to manage your energy supply by giving them the rights to take action on your behalf. This could be done through contacting your current supplier as well as the new company you may be looking to switch to, and allows them to act on your behalf where necessary.

An LOA comes in two options,

A ‘Level 1’ or ‘Soft LOA’ – authorizes a broker to obtain information relevant to providing a quote.

A ‘Level 2’ or ‘Full LOA’ – authorizes a broker to obtain the same information as a Level 1, but also allows them to enter into contracts on your behalf.

Although you may find a Letter of Authority outside of the energy sector, such as alongside finance and medical sectors, it is most commonly found here. With one, brokers (often called your “agent” in this context) can be given legal authority to make decisions for your business (often known as the “principle”).

What a third party can do on behalf of your business should be specified in your letter, but usually, with your consent, an agent may…

  • Confirm your existing tariff deals
  • Check consumption levels
  • Serve a contract termination notices on your behalf
  • Gather data on your business location and meter portfolio
  • Liaise with current suppliers and handle any issues with billing or repayment
  • Handle administrative issues related to your energy supply and management of your account with your supplier
  • Request and receive all billing information, including copies of energy bills, debt information and payment terms
  • Request and receive current and historical account information including consumption history, supply numbers, pricing deals, and contract end dates
  • Raise complaints with your supplier on your behalf and handle them
  • Obtain information from third party industry databases, for example, metering details
  • Submit VAT and Climate Change Levy exception forms
  • Request meter exchanges and new instillations, including smart meters
  • Handle a change of tenancy
  • Arrange site visit appointments for you
  • Renew your energy contract (level 2 only) or terminate it or opt-out of future automatic renewals
  • Request prices from and negotiate with energy suppliers
  • Find the cheapest gas and electricity

A standard LOA is valid for 12 months, meaning that signing one should be a rare and carefully considered practice. If you do not have an LOA, energy suppliers will not allow brokers to manage the switching process for you.

It also allows for brokers to approach issues that may come up while you switch, for example, you may be rejected during the switching process, but with a Letter of Authority, the broker can deal with this on your behalf and resolve the problem. Without one, this is something you would be expected to figure out on your own. This is necessary because without a business energy broker, the process of switching could be a lot longer and a lot more complicated.

What an LOA doesn’t do…

AN LOA does not enable brokers to agree to any contracts on your behalf; although they may do a large variety of work on your behalf, they are not given the right to do anything without your consent, and you should be kept up to date with any changes happening within your account. This means that you pick the tariffs for you.

What is in it?

Firstly, your letter should specify what specific aspects your agent has control over.

Secondly, you will need to insert a letterhead with your company name printed on it. It is likely this is already accessible to you, but it is important because without it, a background check may need to be carried out to confirm that you are a legitimate business, and this can slow down your application.

Third, a registered office is required alongside your company name and postcode.

Lastly, ensure that your LOA is signed and authorised by the right person, for example, a company CEO, so that the correct permissions are granted to proceed.

What to look out for

You should diagnose the specific phrasing is important, and often, we should consider before signing an LOA whether a document explains what the agent does not have authority over, as well as what it does. An example is to look for language like this;

“For the avoidance of doubt, this letter does not authorise [the broker] to, for example….

  • Terminate a contract with early exit fees without prior consent
  • Share our previous tariff deals with other suppliers

Is it safe to sign an LOA?

Because each company has its own specific Letter of Authority, it is important to read each one individually so you know that not only are you making the decision that is right for you, but also that you are not handing over too much power to the third party on behalf of your business.

The short answer is yes, but only if you are reading every part of your agreement. Like any other contract, whether or not this is what is best for you deeply depends on the specifics outlined by the agent.

Still, it is important to consider what type of LOA you are being granted. For example, you should never have to sign a Letter of Authority in order to get a quote. By doing this, you may be giving them the freedom to enter into a contact they wish to on your behalf, despite your personal financial limits.

Another thing to be mindful of is any agreement that grants a broker “exclusive” rights to negotiate your contract; this takes away your own control by giving them the opportunity to make the decision on your behalf, at any rates they like. If a broker is confident in their own work, they should be confident that they can work alongside you to achieve your goals. Anything pertaining the word “exclusivity” is something to consider when you want to hold on to your own portion of the decision making.  

What information should be on an LOA?

You need to include information such as…

  • The name of the agent you have chosen to give this authority to, their company number and address
  • Their permissions; what they may do on your behalf
  • Their limits; what they may not do

You may be asked to provide additional details, such as;

Business Name 
Address line 1 
Address line 2 
Postcode 
Telephone Number 
Email Address 
*MPAN(s) – Electricity 
***Account number 
**MPRN(s) – Gas 
**** Account number 
  • Signatures from both yourself giving authority, and the company

These documents may be signed by hand, esignatures or recorded as verbal agreements.

What happens after I submit, and how long will it take?

Once you have submitted your Letter of Authority to the agent, this should take several days to process. You will then be contacted to confirm the partnership and should then be assigned a personal accounts manager following your contract going live. The account manager should always be transparent and accessible to you for any concerns or questions you have.

Here at Energy Solutions, we want to give you as much freedom over your LOA as possible, so we created a basic agreement for you. It is available to view below, but free to download here.

To Whom it may concern     

Authority

Ref:

I/we hereby authorise Energy Solutions to review our electricity / gas / water contracts.  I/we authorise them to:

  1. Carry out an audit of our electricity, gas and water supplies to identify any changes in tariffs or metering that would be beneficial to us.
  2. Obtain from our current suppliers any data that theydeem necessary, including all billing history and half-hourly consumption data where applicable.
  3. Invite tenders from licensed suppliers, including our current suppliers, on our behalf for our new contracts along with, where applicable, any “enabling” contracts necessary to comply with the relevant industry regulations.
  4. Analyse all contract supply offers and determine the most cost-effective solutions to meet our requirements.  Arrange acceptance and registration of contract offers on our behalf.
  5. Issue termination notice with regard to existing supply contracts on our behalf.
  6. To contact our current supplier to resolve any objections or rejections regarding the transfer
  7. Obtain information from third party industry databases, for example, metering details.
  8. Energy Solutions undertakes to carry out its obligations under this agreement with due diligence and following the regulations governing the gas and electricity industries.
  9. Energy Solutions shall use the customer data solely for the purposes of delivering the services specified in this document and may share that data with relevant third parties to do so. Information is managed under our GDPR Policy, available online.
  10. To raise and deal with complaints on our behalf to a satisfactory resolution.
  11. I/we agree to provide a copy bill for each electricity, gas and water supply for verification purposes.

I understand that this agreement shall continue annually, subject to 1 months written notice of termination.

Signed:

Name:

Position:                                                 

An Authorised signatory for and on behalf of:

Date:

For more information about this post and how Energy Solutions can help with your Electricity, Gas, or Water, click on the links, or check out the contact details at the bottom of the page.