Auditel Consultant:
Simon Beechinor

Energy contract rollover?

20 Apr 2010 | Filed under: Cost management, Electricity, Gas, Uncategorized, Water

In the utilities sector, contract rollover clauses are something for you to worry about. Rollover clauses are usually termed along the lines of “if you wish to terminate the contract you must contact us in writing no sooner than 90 days and no later than 30 days before the anniversary of the contract signing date”.

These clauses generally sound fairly benign, but they are usually written with the intention of retaining your business for as long as possible or penalising you if you try to cancel the service. They leave you a small window of opportunity to cancel the contract and if you miss it you are penalised. If you are asked to sign a contract with such a clause, read it carefully and make sure you fully understand the implications. Are there penalties if you cancel in the second or subsequent rollover terms?

Utility companies often make matters worse by dressing up their renewal letters to clients so they have the appearance of marketing material, ie: they know that they’ll not be read and simply thrown in the bin. That way, you are more likely to rollover by default and the utility provider retains your business.

Not all companies use these clauses in such an underhand way. We have seen examples where the rollover clause applies simply to ensure continuity of service at the end of a contract, and the consumer may contact the company any time after the rollover date to cancel the contract without penalty. The important thing is that you, the client, understand the particular contract you are holding. If you don’t know – then please ask for professional help.