The energy market regulator, Ofgem, has introduced rules which mean you now have more freedom when it comes to arranging a better business gas or electricity contract. All you need to do is ensure you arrange a new deal while you still have more than 30 days remaining on your current contract.
Ofgem also requires that, around 60 days before a fixed-term ends, suppliers must tell micro firms how much energy they use each year, and give them details on how the price of their current deal compares with the new prices the supplier proposes to charge.
The regulator says having this information puts businesses in the ideal position to negotiate a new deal when their current contract is close to expiring, enabling them to either agree prices either with their existing supplier or sign up to a new one.
If you’re on a fixed-term contract, you can find the end-date and notice period on any bill. And you can tell your current supplier that you want to switch at any time before the notice period begins.
What does this mean for firms who want to switch?
The net effect of the Ofgem changes is that businesses are no longer restricted by short, rigid timeframes when it comes to arranging a new energy deal.
Before the changes took effect, businesses that wanted to switch to a better deal had to do so in a specific timeframe, known as a switching ‘window’, which was defined by their existing supplier.
A business would have to use the window to arrange a new gas or electricity contract that they would switch to when their current deal expired.
The issue with this window was that it varied from supplier to supplier – consistency was lacking, and windows typically lasted anywhere between 60 and 120 days. To make matters more complicated, different suppliers opened their respective switching windows at various points in the life of the existing contract.
If a business missed this window, it was rolled onto – and tied into – a more expensive energy contract, which would normally last a minimum of 12 months. In short, missing the window could prove to be particularly costly.
Businesses are free to inform their current supplier that they'd like to switch – and free to arrange that switch – at any point from the beginning of a contract up to 30 days before it expired
Abolishing switching windows
Fortunately, Ofgem announced last year that this switching window – and the rules surrounding it – needed to change.
The new rules mean switching windows have effectively been abolished. As such, businesses are free to inform their current supplier that they'd like to switch – and free to arrange that switch – at any point from the beginning of a contract up to 30 days before it expired (the notice period, mentioned above).
What's more, the process of rolling businesses onto more expensive contracts – and tying them into these contracts if they hadn't arranged a switch or renewal – has been stopped.
Suppliers have been rolling these changes out since the summer of 2014, and now all but one (Extra Energy) has done away with the switching window.
With rollover contracts also abolished by the majority of suppliers, businesses now enjoy far more freedom when it comes to switching to a better deal for their gas or electricity.
Switching to save
If you're a business owner looking to take advantage of this new found freedom, it's recommended that you contact a broker four to six months before your existing contract expires.
This will enable brokers to compare prices and present you with an accurate quote for a new contract that you can switch to when your current deal expires – and a good broker will set this up on your behalf.
If you're not currently in a contract – or an old one recently expired – then you should arrange a new deal as soon as possible in order to secure cheaper rates and minimise your bills.