Ban on automatic rollover contracts takes effect

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Convenience stores will be able to save huge amounts on their energy bills after measures the Competition and Markets Authority introduced take effect this week (27 June).

Gas and electricity suppliers can no longer roll microbusinesses over onto expensive gas and electric contracts.

The changes come after the Competition and Markets Authority’s (CMA) two-year investigation that found about 45% of microbusinesses across Great Britain were stuck on their suppliers’ expensive default tariffs, or deemed rates.

These expensive contracts are invoked when existing contracts end and businesses fail to negotiate new supply deals within a specified time frame.

The CMA made its recommendations last June and, from today, suppliers will not be able to lock what the Association of Convenience Stores (ACS) says is the vast majority of convenience outlets into automatic rollover contracts.

The CMA said it hoped the outlawing of rollovers among microbusinesses and its requirement to make it easier for such firms to compare the cheapest energy prices by making information clearly available on their websites or via a link to a price comparison website, would help microbusinesses save up to £180m a year across the board.

The changes come after several years of campaigning by the Association of Convenience Stores and other business groups to end the practice.

James Lowman, ACS chief executive,said the trade body would “continue to work to ensure that convenience stores are given the same protections as domestic consumers when dealing with energy companies”.

Dermot Nolan, chief executive of energy market’s regulator Ofgem, added that microbusinesses would also be able to leave more expensive auto-rollover default tariffs without paying an exit fee, freeing them to switch to a better deal.

Roger Witcomb, chairman of the Energy Market Investigation for the CMA, said small businesses relied on keeping overheads down to survive, so to find that nearly half of the microbusinesses across the country were on pricey default deals was worrying.

The CMA discovered during its investigation that rollover tariffs for electricity were up to 66-82% higher for electricity and 70-116% higher for gas.

Readers' comments (2)

  • But what is the definiton of a micro-business and how many convenience store fit that category!

    Unsuitable or offensive? Report this comment

  • At last someone had guts to standup to face these companies who were ripping off the micro businesses to increase their profits. I am so relived that I will not get
    Tied up with the roll on contracts and bring my overheads down.

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