Statutory consultation on non-domestic automatic rollovers and contract renewals

Publication date
30th July 2014
Closing date
28th August 2014
Policy areas
Status

The letter below contains our final proposals to improve the information suppliers provide to micro-businesses when they renew an energy contract. It also covers our proposal to standardise the timeframe for contract renewals. We would like to hear your views on the effect of these proposals and our proposed modifications to the standard licence conditions 1 and 7A of the electricity and gas supply licences.

Our new rules would require suppliers to:

• include the consumer’s estimated annual consumption, current prices and the automatic renewal prices on the renewal letter
• require consumers to give no more than 30 days’ notice if they want to leave at the end of a contract – rather than the current maximum of 90 days
• acknowledge receipt of a termination notice within five working days.

The closing date for responses was 28 August 2014 and you can view the non-confidential responses below.

We are not proposing to ban automatic renewals at this stage, as doing so carries some risks to consumers and we are considering whether it would be proportionate and in consumer’s interests. However, we have serious concerns about the difference in prices charged by a very small number of suppliers when they renew contracts automatically. This practice may be unfairly penalising customers who do not actively engage with their supplier at contract renewal. Over the next six months we will monitor whether this situation changes: if not, then we will reconsider the case for a ban on automatic renewals.

To further help small businesses, we plan to publish an updated factsheet to help them know what to look for as their fixed-term contract comes to an end, so they are equipped to shop around and avoid an automatic renewal if they wish.

Consultation decision

This statutory consultation contains our final proposals to improve the information suppliers provide to micro-businesses when they renew an energy contract. It also includes our proposal to standardise the timeframe for contract renewals.