We all know business energy contract switching is a minefield.
You have found a suitable price and signed a contract with your chosen supplier. Job done.
Or, is it?
There is a considerable amount of administration to be completed behind the scenes before your new contract takes effect, as well as the odd bunfight. The UK’s business energy market is a fragmented tangle of information which frequently throws up errors and mistakes which can prevent a contract from proceeding as planned.
In this short blog we cover the main hurdles your contract must clear after you’ve put pen to paper.
Lock-ins
The first thing that must happen when a new utility deal is signed, whether gas; electricity; water; waste; payments; broadband; or telephony, is for your supplier to confirm they intend to supply your business.
They will check your business credit rating, payment history and industry type before accepting your contract.
Why are they so picky? Well, because most of the industry is one big administration exercise. Many retail suppliers do not actually generate their own electricity. They buy it on the wholesale market and sell it on to your business. As a result, if they think your business won’t pay your bills, they won’t take the risk of purchasing the block of energy needed to fulfil your agreed supply.
The whole transaction is a hedge against the price of energy globally.
Once your contract is locked in, there is a period before your contract reaches its start date, known as the “go live” period.
Applications during business energy contract switching
If your meter is switching supplier, two things must happen in the time between lock-in and the contract’s start date.
Firstly, your incumbent supplier must agree to release the meter. This will only be actioned if you have no outstanding debt and they have no reason to believe the meter is leaving underhandedly. Underhandedly could mean a change of tenancy (CoT) which is not genuine; or you have previously agreed a contract with your incumbent supplier. Remember, business energy contracts are legally binding and cannot be replaced after you have signed one.
Secondly, your new supplier must apply for the meter. If your incumbent supplier has not yet released your meter, this application will be rejected. Switches can be objected to and prevent contracts from “going live” on time.
New suppliers each have their own rules about applying for meters, but a general rule of thumb states that they will apply three times within a set time frame. If they are unsuccessful, they will terminate your new contract. Drastic!
This is why it’s important to keep your account up to date and work with incumbent suppliers on debt or issues.
This exercise is carried out via a central database of meter statuses. However, every supplier then has their own terminology, making matching data between suppliers very difficult for anyone comparing information. There are strong calls for increased centralisation of data within the energy industry.
This process is much smoother if your contract is staying with your existing supplier. The application does not need to be made.
Objection handling
Many times, because of the reasons we have outlined, contracts can go into “objection” and be at risk of not going live. This can leave businesses on costly out-of-contract rates and incur unwelcome financial penalties.
Being able to see behind the curtain of this process is hugely advantageous for more complex businesses with multiple meters, premises or procurement needs.
This is one advantage of working with a Third Party Intermediary (TPI), hint hint, wink wink. At Procure Smart, we have a dedicated resource monitoring all of our contracted meters and working with customers to overcome any hiccups in the application process. This is a level of service you won’t get working directly with a supplier. As well as identifying issues early, we can automatically deal with them, ensuring your contract goes live as planned, whereas a direct supplier contract might be terminated in the same scenario or returned to you with tight deadlines for action.
Go Live
As long as all of the above stages have been completed effectively, your contract will go live with your new supplier. Live dates can be in the future or backdated in certain circumstances.
“Faster switching” was implemented by Ofgem in 2022, which reduced application time from several weeks to a maximum of five business days thanks to the introduction of the Central Switching Service (CSS). Suppliers are obligated to adhere to this legislation but often need help from customers or TPIs in order to meet their deadline.
This means if you are looking for rapid business energy contract switching, you can achieve this in roughly one week.
If you are looking for speedy turnaround on a business gas or electricity contract, or you have had contracts terminated pre-live by your new supplier and require some help, simply complete the form below and Procure Smart can offer support.
