Ofgem backs down on contract rollovers

Ofgem has backed down from its plans to ban automatic contract roll over for small business customers.  Ofgem received strong opposition to the plan from the big six energy suppliers and a number of smaller, non-domestic energy marketers.


The ban on contract rollovers had been welcomed by small businesses, consumers and trade associations.  The ban was one of the key remedies proposed by the regulator following last year’s price probe.


Ofgem came under pressure from the suppliers concerned that a ban might have a detrimental impact on the market and on customers.


The suppliers successfully argued that the move would increase uncertainty around customers demand, increase suppliers costs, increase customers costs and disadvantage customers reluctant to get involved in the market.


There was also concern from supplier concerned that their energy and credit costs would increase.  Suppliers we’re also using their contracted customer base as collateral.


Ofgems new proposal is for a 12 month cap on all automatic contract rollovers.  The regulator also wants a 30 day minimum period during which the customer can notify they are switching or wish to agree a new contract.


Ofgem are also proposing measures to make it easier for customers to transfer to a new contract and which requires suppliers to make more information available about customer’s options.