Auditel Consultant:
Tim Halfhead

Beware the contract rollover

23 Jan 2012 | Filed under: Cost Management

There was an excellent piece in yesterday’s Mail on Sunday (The Enterprise Zone) about White’s Seafood and Steak Bar in Hastings which had received a letter from British Gas the previous month warning that their energy contract was soon due for renewal and that failure to terminate the contract within a 3 week renewal window would see them rolled over on to a two year contract at a kWh rate 47.7% higher than their current contract. With an annual usage of 76,000 kWh this would mean an additional £3,200 a year. That’s an awful lot of fish suppers!

British Gas had, however made an error as the business should have been classed as a micro-business as it has fewer than 10 employees. Legally, suppliers can only roll micro-businesses on to contracts of 12 months at most. White’s has, unsurprisingly, terminated its contract and taken its business elsewhere.

This point aside, the important thing is that the proprietors of White’s actually read the letter that they were sent and acted on its contents. I see so many companies who ignore these letters (and let’s face it some seem to be deliberately designed to look as boring and uninteresting as possible so that they get binned or filed as just another peice of junk mail) and then are startled to discover the new pricing that they are landed with which can include huge hikes in both standing charges and the energy cost. At Auditel, of course, we diarise contract renewals so that our clients never get caught out by this sort of thing.