An electricity renewal is when your contract is coming to an end and you are given the opportunity to switch.
It’s very important to keep an eye on that letter through your door telling you when your contract is up for renewal because energy companies have a few little loopholes to keep you on a contract that might not necessarily be the one best suited to your business. Getting things sorted quickly is the only real way to save the extra pounds you need.
And by the way – this isn’t just a little extra cash; automatically renewed contracts can have a tariff that’s up to 80% higher!
It’s not just saving money that’s important here. Being with an energy provider that has good customer service is essential. You don’t want to be kept waiting or messed about when it’s on your businesses time (and therefore money. Always comes back to bite your wallet in the end!).
Most electricity companies (I’m looking at you EDF) will advertise that you’re able to switch “free of charge” and “with our business plan, you will be warned 90 days before your contract ends”. Now, these things are true, but they are also obligated by law to provide this. It’s like low-calorie ice cream pretending it has more protein than regular ice cream, by simply advertising the existence of proteins present in the milk.
As mentioned before, when it comes to energy for business, it’s all about the timing. According to Ofgem, it can take up to 2 to 3 weeks to renew – so do it fast.
Also, businesses aren’t afforded the 14-day cooling-off period that domestic customers are given, so you have to do your research in advance to make sure you are getting the right deal.
Reasons you won’t be allowed to switch are:
- They can decline to let you switch if you are still in a contract with them
- They can decline to let you switch if you are in debt to them
- You can’t change business electricity supplier until your contract is in the ‘switching window’. This is normally between one and six months before the end date.
What about micro-businesses?
Things are more complicated for small businesses (aren’t they always?). The maximum notice period for terminating a business energy contract has now been reduced from 90 days to 30 days for micro-businesses. However, in your favour – suppliers will also be required to provide micro-businesses with information on how much energy they use and how their new price will compare with their previous deal.
To be classed a micro-business, a customer must one of the following criteria:
- Have fewer than 10 employees
- Consume less than 55,00 kWh of electricity a year
- Consume less than 200,000 kWh of gas a year
Just check to see if your small business actually does meet these stipulations because: suppliers are still not required to provide larger businesses with a renewal letter, so you could be rolled over without even being told first if you have 11 employees! If you don’t meet the micro-business requirement, it’s vital to be aware of when your contract is coming to end.
Frequently asked Questions
- What is the best month to renew electricity?
Annoyingly, the best time within your contract to switch your energy deal is when you no longer have to pay early exit fees – which means you actually have to go and check out when that is, as it varies from supplier to supplier. The amount of time it takes to switch supplier varies, and you could end up paying a few days or weeks’ worths of standard variable tariff fees. The process could take up to a month to complete, even with the Energy Switch Guarantee which states that switches should take place within 21 days.
You are entitled to switch to a new deal or supplier from 49 days before the end of their contract, this is because Ofgem states that exit fees should not be applicable to switches from a fixed-term tariff within that window.
You can keep track of these dates yourself, but suppliers (or price comparison websites, if that’s how you switched) should be alerting you in writing so you don’t need to.
- When can I leave my energy supplier without penalty?
Before switching, check whether you’ll incur a fee for cancelling your current energy deal. Exit fees are common with fixed-rate tariffs if you switch early. The good news is that all suppliers should now allow you to leave up to 49 days ahead of your tariff’s end date without incurring a penalty.
- Are energy prices set to rise in 2021?
Since the introduction of Ofgem’s energy price cap in January 2019, most suppliers have based energy prices on their default tariffs on the rate of the price cap.
Following an increase in the price cap level announced in February 2021, suppliers have begun to raise their prices for customers on default tariffs.
All of the ‘big six’ energy suppliers have announced price rises, each implementing an average £96 annual increase for customers on standard variable and default tariffs. These price rises will come into effect from 1 April 2021.
- How do I avoid early exit fees?
There is a small window on a fixed term plan, in which you can switch suppliers, but avoid exit fees. Many people aren’t aware – and it’s not made particularly obvious by suppliers – that if you switch suppliers in the 49 days before your contract with your current supplier ends, you won’t be charged an exit fee.
- Is it a good time to switch energy supplier?
When was the last time you changed your gas and electricity tariff or provider? If you’ve never switched, the best time to switch suppliers is right now – you’ll quickly realise you’ve been overpaying for way too long.
Once an energy tariff elapses – they usually last no longer than 12 months – your supplier will automatically place you onto its standard plan. Unsurprisingly, this is often it’s most expensive. But this also means you can make significant savings by switching to a deal with a more competitive rate.
- Why is my electric bill so high all of a sudden 2021?
See question 3
- Is it better to fix energy prices for longer?
Energy prices change all the time. If energy prices rise over the next few years, you could end up switching to a pricier deal when your short fix ends. The less likely you are to switch, the more you should consider a long fix. You may not get quite such a good rate, but it’ll stay relatively cheap, even if you’re inactive.