Have You Been Refused An Energy Contract?
You may have heard some talk about energy suppliers requesting upfront payments prior to agreeing a contract.
The impression given is this is a practice that has recently been brought in by suppliers..
In fact, it is not new.
Upfront payments requested, refusal to negotiate Payment Terms, and Refusal to renew contracts, all typically come down to customer failing supplier credit checks. All commercial contracts are subject to a credit check where if a customer doesn’t meet the criteria, they may be offered limited terms or not offered a contract at all.
We have seen more businesses struggling in recent years (impact of lockdown closures and economy in general etc) and this is reflected in their business accounts and credit scores, so many businesses have ‘worse credit’ that they would have had previously. In addition to this due to the risk to certain sector such as hospitality as well as the risk to suppliers being increased due to the volatile market (as if they buy energy for a customer at a high price and the customer ceases trading, they will make a loss) many suppliers have increased their credit threshold. The combination of the two things mean we are seeing more and more customers fail credit checks with suppliers.
The solution we offer to this is either to negotiate with the supplier, where possible, by providing copies of the business accounts, or a Parent Company Guarantee etc. Failing that we will find the customer an alternative supplier who will accept the contract.
We have seen in some cases suppliers not offering renewals due to them no longer operating within that space of business or if they cannot offer fixed pricing (during the peak of the market last year) and again we would find an alternative supplier for the customer in this case.
Regarding the volume tolerance or ‘Take or Pay’ clauses, these are not new and have been included in most commercial contracts since my time in the industry, however these are very rarely enforced particularly for SME customers. Whilst this still isn’t common, we have seen slight uptick to customer being penalised by these charges.
We combat this by doing the following: ensuring consumption figures on contract are correct, making suppliers aware of any potential changes to usages at site, and by avoiding suppliers who pass on these charges unnecessarily.
We are registered to Ofgem’s Dispute Resolution process and ensure we are compliant in our practices. Part of the benefit of our service to customer is that we know the industry, and challenge suppliers if they misinform customer or not acting correctly.
For all your commercial energy and water needs then speak to Paul on 0800 954 5117
electric procurement
energy
Energy Broker
Gas & electric
Gas Procurement