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Energy Disputes – A Guide for Businesses

Dealing with your energy bills can be complex and time consuming and it can be hard to know what to do if you’re threatened with legal action by your supplier. Our business dispute solicitors can help you to navigate these situations and in this guide, we’ve covered some of the most common issues businesses face when it comes to energy disputes.

Are you being overcharged by your business energy provider?

If you suspect that you’re being overcharged by your business energy supplier, there are ways you can investigate this. These include:

  • Looking at your average daily consumption (sometimes referred to by the acronym ‘ADC’): As a rule of thumb, the bigger your business is, the higher your average usage and energy costs will be – but factors such as the industry you operate in and your location will also make a difference.
  • Looking at what rates have been applied to your bill: These should be shown on your bill documentation. It’s a good idea to check what’s shown on here in comparison with what’s on the face of the original contractual agreement you entered into with your energy supplier, because you can then clearly see whether the two rates are in line.
  • Checking that you’ve received any discounts you’re entitled to under the Energy Bill Relief Scheme (EBRS) and Energy Bills Discount Scheme (EBDS): If you qualify for help under these government schemes (and we’ll cover this in more detail below), make sure that the appropriate discounts have been accounted for in your bills.
  • Looking generally at energy consumption: Sometimes a faulty meter is responsible for unusual energy bills. Get this checked out if you feel your bills look very high and also check whether there are any obvious errors showing from your meter readings.

Understanding rates

What is a ‘deemed rate’ and when does it apply?

Suppliers charge you a deemed rate for gas and electricity use when there hasn’t been a contract negotiated between you. This situation might arise if you move into a new business premises, for example, and begin using the energy supply there immediately. In practical terms, you’re then charged a deemed contract rate by the property’s current supplier and this often works out as more expensive than if you research a better deal.

A deemed contract rate situation might also arise if you reach the end of a fixed-term energy contract and you haven’t signed up to a new deal by that point.

What options are there for contractual rates?

There are a few different options for contractual rates when it comes to your energy bills. They include:

  • Fixed rate tariffs: These types of tariffs provide the benefit of knowing exactly what you’ll be charged per kilowatt hours (kWh) of energy use and are popular with both businesses and individuals alike for budgeting purposes, so that you can keep an eye on your gas and electricity consumption.
  • Variable Rate tariffs: The energy market’s fluctuations will determine how much you’re charged per kWh on a variable rate tariff. This means that when the market is favourable, your bills will be less, but when it isn’t, you’ll pay more. The wholesale price of energy at any given time plays a key role in this too.
  • Rollover contracts: These are similar to using energy on a deemed contract rate except that they’re in place for a full year. Typically the rates are considerably higher than on fixed and variable rate tariffs.

A note on out-of-contract rates

These rates are generally speaking what energy suppliers will charge you if you allow your fixed deal to expire without agreeing a new rate with them in advance. They’re usually more expensive than the rates under a fixed tariff, but you can switch at any time as long as you give 28 days’ notice.

Can a business customer look for a better rate?

Usually, it’s open to you to switch to a better rate for your business energy bills if you’re on a deemed contract rate (see above), or if your fixed-term energy contract has ended. It’s important to check in the latter case whether your current supplier has a notice period: you can do this by checking your terms and conditions or speaking to your supplier if you’re unsure.

Can you cancel your business energy contract?

Business energy contracts by default don’t have a cooling-off period built into them, so it’s crucial to be mindful of this and exercise due diligence when you’re deciding which supplier and tariff to sign up to.

The main thing to be aware of if you want to cancel your business energy contract before it comes up for renewal is the need to give the correct notice of termination according to the terms of the contract so that it definitely ends when your contract expires. The amount of time required for the notice period will vary between suppliers, so you should check what’s written in your contract with them and make sure you give notice in writing to cancel it in plenty of time before the contract’s end date. Be sure to include:

  • The energy supplier’s address
  • Your company’s registered business address
  • The contract number (this will be on your bills and any correspondence from them and will be shown as ‘MPAN’ for electricity bills and ‘MPRN’ for gas bills)
  • Your meter numbers

It’s wise to send your termination letter via registered post, in plenty of time before the contract’s end date (having checked for this timeframe); asking for a written acknowledgement from them and ensuring you keep a copy of the letter in case any issues arise.

Understanding back-billing

The rules around back-billing essentially mean that your energy supplier can’t charge you for gas or electricity used more than 12 months ago if you haven’t been correctly billed for it or previously informed about it via a statement of account. These rules apply to small business energy customers, including microbusinesses (see below under ‘What is a microbusiness?’), and also cover the scenario where your supplier increases your direct debit because it was set too low.

It’s also worth knowing that suppliers have to make these terms clear in your contractual terms and conditions, and that the rules on back-billing might not apply if you’ve behaved unreasonably or obstructively in such a way to prevent accurate billing, e.g. if you’ve prevented meter readings from happening at your business premises on more than one occasion.

What is a microbusiness?

Your company is classed as a microbusiness if you:

  • employ fewer than 10 employees (or their full time equivalent) and have an annual turnover or balance sheet no greater than £1.8 million; or
  • use no more than 100,000 kWh of electricity per year; or
  • use no more than 293,000 kWh of gas per year.

This means that if you have more than 10 employees, you might still be classed as a microbusiness for the purposes of either gas or electricity, or for both, because it depends on the amount of energy you use, so you’ll need to get quotes for each one. If you’re unsure how much gas or electricity you use in a year, you can check your bill or contact your supplier.

The Energy Bill Relief Scheme (EBRS) and the Energy Bills Discount Scheme (EBDS)

The Energy Bills Discount Scheme (EBDS) replaces the Energy Bill Relief Scheme (EBRS), which came to an end in March 2023. It provides eligible businesses with an automatic energy bill discount for the period 1 April 2023 to 21 March 2024 as long as certain criteria are met. You can read more about the eligibility requirements and exclusions on the UK Government’s website here, but in summary, if you’re eligible, you’ll get a discount on your bill if the wholesale price of energy is above:

  • £302 per megawatt hour (MWh) for electricity
  • £107 per megawatt hour (MWh) for gas

The maximum discount is:

  • £19.61 per megawatt hour (MWh) for electricity
  • £6.97 per megawatt hour (MWh) for gas

What should you do if your energy bill is higher than expected?

If your energy bill looks unusually high, we’d recommend the following options:

  • Collect evidence: It’s very important to gather as much evidence as possible as to why you believe your bills are too high. This is likely to include collating your bills and checking back over meter readings.
  • Instruct a solicitor: You can get in touch with an experienced energy disputes solicitor to help you with putting together a case against your energy supplier. Energy disputes can be complicated so having specialist support from an early stage is wise.
  • Make a complaint to the energy supplier: You can get in touch with your supplier to ask for their complaints procedure if you can’t find this information on your bills or on their website. If you choose to go down this route, exercise caution and if you make any settlement offers, make clear in your communications with them that the offer is made ‘without prejudice.’
  • Refer your complaint to the Energy Ombudsman: If you aren’t happy with your supplier’s response to your complaint or if they don’t fix the problem within 8 weeks, you can complain to the Energy Ombudsman. We’ll discuss this process in more detail in the section headed ‘The Energy Ombudsman’ below.

The Energy Ombudsman

The Energy Ombudsman can make energy suppliers fix problems, apologise to you/explain what’s happened or pay you compensation. You can read in more detail about the process on their website here but in summary, these are the steps to be aware of:

  • You raise the issue with your supplier and they have up to 8 weeks to try and fix the problem, or if they send you a deadlock letter you can contact the Ombudsman sooner. A deadlock letter is a letter or email from your provider stating that your provider can’t do anything else to resolve the dispute.
  • If after either 8 weeks passes or you receive a deadlock letter, you can register your dispute with the Ombudsman for free via telephone, post, email or their website.
  • You’ll then have up to 14 days to provide the Ombudsman with all of your supporting evidence.
  • The Ombudsman will review your case and make a fair, impartial decision. Both you and your supplier will have the opportunity to review it and if you decline their decision, you’re then free to take your dispute to court for a judge to resolve it.
  • Once the Energy Ombudsman has given its final decision, there is only a limited right to appeal in cases where new evidence has come to light since the dispute was submitted or if a material error has been made. If you accept the Ombudsman’s decision, your supplier is obliged to implement the proposed remedy within 28 days.

What if your energy company has threatened to disconnect your energy supply?

If your energy supplier has threatened to disconnect your supply, this might be because you’re in arrears with your bills due to financial hardship. They should help you come to a solution if you contact them to say you’re struggling to pay and you should act as early as possible if you are.

If you haven’t paid your bill within the timeframe permitted by your supplier, they usually only have to give you 7 days’ notice before disconnecting your supply. If you don’t contact them immediately to pay off the debt and subsequently refuse to allow them to access your premises, they’ll have to go to court to get permission to enter and a court hearing will be arranged – you’ll receive a letter letting you know when this will take place.

How we can help

There are several ways our business dispute lawyers can help you with resolving an energy dispute. Whilst we can’t advise you on technical defects with your meter, we can:

  • Review your energy invoices and advise you on any concerns you have with these
  • Write to your energy supplier on your behalf and/or raise a complaint for you
  • Complain to the Energy Ombudsman on your behalf
  • Advise you of your options if you’ve received notice that your supply will be disconnected

Summary

Energy disputes can be vast ranging and technically complicated, so seeking specialist support is a good way to achieve peace of mind that your company’s needs are being taken care of by a professional with expertise in this area. It’s useful to gather together all of your evidence as early as possible if you suspect that something’s amiss with your bills and check through everything carefully, taking specialist advice where you need it.

About our expert

Jo Wilson

Jo Wilson

Senior Dispute Resolution Solicitor
Jo is a Senior Dispute Resolution Solicitor who qualified in 2010 and joined Harper James in April 2023.


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