How businesses use electricity and gas differs greatly from how the average home in the United Kingdom (UK) uses them. For this reason, the types of energy contracts that businesses are offered by energy providers are very different from those that are offered to domestic users. In fact, there is even a big difference between the contracts that the different energy providers offer to businesses. The best way of finding out what these differences are is by using an energy business comparison like utilitybidder.co.uk
It is imperative that businesses are fully aware of the type of contract that they have with their energy provider, or before deciding to choose electricity provider in order to determine if it is the right one for them. As far a microbusinesses are concerned, there are specific rules that exist about how they can be billed. However, there are certain criteria that a business must meet in order to qualify as a microbusiness.
If it is the case that a business has failed to agree a new energy contract with either the same energy provider or a new one before their current one comes to an end, and no renewal provisions are in place, then a business will be rolled over onto this type of contract. As far as microbusinesses are concerned, a rollover contract cannot last any longer than one year (12 months).
Deemed / Out Of Contract
When a business moves into a new premises and has not yet taken out a contract with an energy provider, then a deemed contract applies to this situation. It is also the case that a business may be on a deemed contract if their contract with their energy provider came to an end but they did not move elsewhere. This only really happens where the contract does not have any sort of renewal provisions in place or does not state what happens come the end of the contract.
Both out of contract and deemed contracts are amongst the most expensive types of contracts that energy providers have. This is why it is important for businesses to find a new energy provider as soon as they enter a new premise and never allow an energy contract to come to an end without having something else in place. Doing these things will save the business a great deal of money.
Where a business is on a deemed contract, the energy provider should provide them with all of the terms of the contract, including the fees and any charges that are involved. If a business asks for a copy of the contract then the energy provider must provide them with a full copy of it. Energy providers should do everything that they can to provide businesses that are on deemed contracts with information about the other types of available energy contracts that they offer and how they can apply for any of them.
With this type of contract, the price for a single unit of energy that a business pays is linked directly with market activity, thus meaning that it varies and is never static. As a result, businesses with this type of contract in place are never fully aware of what their next energy bill will be as the unit price is likely to have changed since last time. Because of this, there is the possibility that a business can pay more or less for the energy that they use, depending on how the unit price fluctuates.
In order to provide businesses with a greater level of security and stability over the cost of their energy bills, fixed contracts work off having a pre agreed, fixed price for the cost of energy for the entirety of the contract. Each individual bill that a business receives will still fluctuate, depending on how much energy they use that month, but the price that they pay for each individual unit of energy will remain static.
These contracts are much longer lasting than what the typical domestic energy contracts are and can actually be as long as 5 years in length; although most range from between 1 and 3 years. Businesses are locked into the contract and are unable to change to a different energy provider until they have reached the switching window. This typically comes somewhere nearing the very end of the energy contract. When a business does not switch over to a different energy provider or onto a new contract with the same energy provider, they will automatically be rolled onto a default contract. These are usually very expensive and so businesses should do what they can to avoid this situation from happening. For this reason, it is important that businesses are aware of when their energy contracts are coming to an end.
Cooling Off Period
Unlike the typical domestic energy contract, with these types of business contracts, there is none of the usual 14 days cooling period in which you can cancel the contract for any reason without being penalised. For this reason alone, it is worth doing plenty of research, including reading through all the terms and conditions, before committing to a particular energy provider or tariff.
Single Fuel Tariffs
When it comes to business energy contracts, they differ from traditional domestic energy contracts in that there is not the option for businesses to take out a single fuel option – they simply do not exist. Instead, businesses have to shop around and obtain individual quotes for both electricity and gas tariffs. In addition to having separate contracts for each of these, businesses will also be billed separately for them also.
Some businesses choose to use a business energy broker to do this sort of thing for them, However, it is important to be aware of the fact that the final rate that is agreed upon will no doubt include the fees of the broker. In order to avoid this situation, it can be beneficial for businesses to firstly establish what the terms of the business energy broker are before agreeing to using their services.