If your contract ends, you'll usually simply be switched over to your supplier’s out-of-contract rates. These can be much higher and can result in up to a 50% increase on energy prices. As this can be beneficial for suppliers, there's very little incentive for them to suggest you move rates.
The Competition and Markets Authority (CMA) found that 45% of microbusinesses (broadly speaking, those with under 10 employees) were stuck on their suppliers’ most expensive default tariff. They were collectively paying around £180 million a year more than they would in a more competitive market.
Subsequent to this finding, rules have changed for microbusinesses so that suppliers:
- Can't automatically impose expensive rollover contracts and rollover contracts can only be a maximum of one year
- Have to reduce the notice period required from 90 days to 30 days
- Must advise microbusinesses about how their current tariff compares with the new prices and show annual consumption on their renewal letters
- Have to make comparing and switching easier by publishing prices for commercial customers online
Get advice from Ofgem on understanding energy contracts for businesses.