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What is a Letter of Authority (LOA)? | Business Energy

Man signing LOA

Before a Third-Party Intermediary (TPI) can provide you with a quote for your business energy, they require a signed Letter of Authority (LOA), but what exactly is this? And why is it required?

What is a Letter of Authority (LOA)?

LOAs are most often used when comparing business energy deals, but can apply to a range of business contracting situations. It’s a document whereby you give consent for a third party to speak with suppliers on your behalf. Without one, they can’t discuss your business contracts or access essential information to provide a quote. Authorised tasks are usually listed in the document outlining pre-agreed limits on what actions the third party can take.

Managing business energy is immensely time-consuming and complicated, which is where TPIs make a living, finding appropriate and attractive deals.

What does a Letter of Authority (LOA) enable the third party to do?

The LOA document should list responsibilities. Typical examples for an energy LOA would allow a TPI to:

  • View relevant data – Third parties can request current / historic energy consumption and contract end dates to find the most suitable option for your business.
  • Compare prices – LOAs enable third parties to negotiate with several suppliers and present a range of contract options.
  • Switch – With a signed LOA, third parties can start the process of signing your business up to a new contract with a different supplier or renewal with your existing supplier- depending which option is most suitable for your business. Suppliers require this level of authority in order to complete the admin associated with a contract for a customer. However, as a matter of policy, Procure Smart does not sign contracts on behalf of customers and most suppliers would not accept a contract of that nature.
  • Manage queries – Should the current supplier have any questions regarding service / billing, the third party can manage these queries for you and ensure a smooth transition; enabling you to focus on other important aspects of running your business.
  • Organise energy-related appointments – For example smart meter installations.
  • Raise concerns – Should you experience any issues with the new contract, the third party can make a complaint on your behalf and speak directly to the energy supplier.

How long is a Letter of Authority (LOA) valid?

The most common term length for a LOA is 12 months. The duration should be stated within the LOA document. After it expires, a new LOA must be signed for future quotes or account management.

Should I sign a Letter of Authority (LOA)?

If you’re looking for a quote, then signing a LOA is a requirement. It’s essential to check the LOA terms so you’re aware of exactly what you agree to. For peace of mind, ask queries regarding the LOA in writing so you have written proof of intent of use.

To summarise, a LOA enables the third party to discuss business energy-related matters on your behalf and secure contracts for your company. The energy market can be difficult to navigate and a time-consuming task. If your business energy contract is due to expire, speak to us for a free, no-obligation chat on 0330 822 1681.

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