Moving into a new premises can be very exciting and there is lots to do, but often the thought of gas and electricity contracts are a long way down the priority list.
Moving into a new premise can be very exciting and there is lots to do, but often the thought of gas and electricity contracts are a long way down the priority list.
This could be a very costly mistake and knowing what to do could save you a small fortune and help put your business in the best position for managing the cost of energy in the future.
When moving into a new building you take it for granted that when you switch the lights on or fire up the gas boiler that it just works.
And often it does, but sometimes you could be a victim of a previous bad tenant that may have got into energy debt and as a consequence, the utility suppliers may have disconnected the supplies.
This can take time to sort out and, in most cases, you will be asked to pay for reconnection fees even though you didn’t cause the problem in the first place.
So, our advice is to plan ahead, and always check the status of the electricity and gas supply before signing any legally binding agreements.
One of the biggest myths is that you can’t start thinking about your new energy contract before you move into new premises. But it really pays to start thinking about these issues and your new business energy contract even before you move in.
As it can help to speed the process up and avoid deemed energy rates or out-of-contract prices for longer periods of time than necessary.
However, in the vast majority of cases, you switch the lights on, and they work.
The current supplier will be whoever the previous tenant had selected though, but often you won’t know who the supplier actually is until either your first invoice arrives, or you have a copy of the previous tenant’s bill. If you don’t know who your supplier is, you can find out who your current energy supplier is in this post here.
In most cases, it can be 3-months before your first invoice arrives, if they bill you quarterly or your supplier may write to you directly to encourage you to reach out to them.
But as you will discover it isn’t in their interest to rush to tell you, and never assume that just because they offer you a price, that the price offered is any good.
Our advice is to always shop around and find a contract that best fits your business requirements, don’t be afraid to say no, and buy some time to check the market and choice of contracts out there.
Hopefully, the previous occupier has already contacted their nominated contracted supplier to tell them that they are moving out of the premises and may have even told them who the new tenant is that is moving in and share your details with them.
There is a formal process for this with energy suppliers, and you can read more on this in our moving out of an existing premise post, to learn how to action a formal change of tenancy with an energy supplier.
If the previous tenant has done this, then the supplier is happy to continue to provide you with gas and electricity, but at what is called deemed rates or out-of-contract prices.
These deemed energy rates are expensive as the supplier must provide cover over a much shorter period of time.
Worst still you could find your business on out-of-contract rates which are typically 40-60% higher than contracted rates, again because the supplier still has to provide you with gas and power but over a much shorter period of time.
You are not committing to them for any given time period so the risk and exposure to them are much greater.
By not committing to a supplier on a contract they reserve the right to supply your business premise with gas and electricity but at whatever price they see fit.
This is a highly profitable area of business for them and as such most suppliers don’t rush to tell you about the benefits of committing to an energy contract with them.
The worst-case scenario
Often when moving into new premises the previous tenant hasn’t informed the current supplier that they have left.
So as far as the supplier is concerned, they are still occupying the building, which you may think is fine.
You switch the lights and on and they work, so happy days.
But the problem starts when the first bill arrives, which could be several months later and its in the name of another company.
For accounting purposes, you will want to have the bill in your name, and you run the risk that the bill covers the time before you moved in. if the previous tenant or new tenant has failed to provide any meter readings.
The rates on the bill maybe horrendous as you are inheriting what ever was in place previously, or on the very rare occasion you could inherit a good price when compared to current market prices.
But this is highly risky and has further disadvantages down the line.
The best advice is to always let the supplier know as soon as possible that you are now the new occupier.
Take a meter reading on the day that you move in and take regular photographs, so you have a track record of readings, as bills are often estimated and there is always a high probability the previous bill doesn’t cover all of the previous tenant’s usage.
If the previous tenant had an existing contract with the supplier, then this is a formal contract under their company name.
So, you won’t be able to serve the notice of termination to the suppliers when it comes to the end of the contract, and you want to compare alternative suppliers and prices. You could find your self-trapped with them on a higher rate, or worst still they have to back date the change of tenancy into your company names and charge you out of contract prices since this date.
Why run the risk in the first place, as we have seen numerous cases where this has happened, so better to get the right thing in place from day one.
Best Practice and our advice
You should always contact the supplier as soon as possible to let them know that you are the new tenant. Don’t rely on the fact that the previous tenant should have notified the supplier as you could be liable for any outstanding debt on the account. Find out more in our moving out of an existing premise guide.
Always take a meter reading on the moving in day and we recommend taking a photograph to prove the readings also, if challenged at a later date.
It can also be useful to take regular readings, so you have a record of the consumption used.
The vast majority of energy bills still use estimated meter readings unless a smart meter or AMR meter has been fitted.
Suppliers will ask for your business details, the date you took occupancy, along with meter readings and sometimes forwarding details of the previous tenant if you have them.
In addition to this and to avoid any fraudulent activity (see our post on the energy scammers) suppliers will ask to see a copy of the lease agreement or formal legal papers to show proof of purchase or tenancy.
Suppliers are wise to the lengths that some people go to in order to break an energy contract, rightly or wrongly so they will always ask for a copy of the lease agreement.
This is standard practice so please ensure you have everything ready prior to contacting the supplier.
Every supplier processes a change of tenancy in different ways, most have a form to complete on their company website, whilst a few would prefer you to call in and confirm the details with them.
This process can take between 5 and 30-days with most suppliers, and most will email the confirmation to you once it is processed. Some will write to you to confirm, but this is becoming less favourable now.
Once you receive this confirmation its is important to understand that you are now registered with the supplier but not in a contract.
So, you have the choice to either ask the current supplier for a contract price or compare other suppliers and products to see what works best for your needs. Energy contract lengths can vary, but typically 12,24,36-months are most common, but 48 and 60-month contracts still exist.
Even though no formal contract exists between you and your supplier now, you may still need to tell them that you plan to move suppliers, or at least have the option to look around.
This is about providing them with what’s called a notice of termination, which is the formal process in advising the supplier that you activate your right to move if you wish.
It never prevents you from staying with the supplier, it just means you are free to move to a new supplier if you choose to.
Not every supplier will need this, but best practice is to do it anyway as it speeds up the switching process if required.
We recommend doing this over the phone as again its speeds the process up, as providing a written instruction can take up to 28-days for a supplier to action, whereas verbally they tend to do it immediately.
As we said not every supplier will need this, and they may simply tell you that it isn’t required, but always best to do so. Without a termination notice required it is also possible for some suppliers to swap you to them in as little as 5-10 days.
So, at this point, congratulations you are ready to pick a new energy supplier and contract type.
But a word of warning and a reminder, until you agree any new energy contract you will be on out of contract prices that can be typically 40% higher than a contracted price.
So don’t delay and get a quote today.
You don’t always need to switch
Our advice is to always shop around first before agreeing any new contract with a supplier, but if you have just moved into new premises on some occasions suppliers will happily put a new contract in place, and back date the start date so as to avoid any out of contract rates.
Sometimes they require you to sign a longer term or will provide prices not as good as the open market, so always check before committing to anything. Most importantly do become a victim of the energy scammers in the market.
Beware of the telephone energy scammers
Unfortunately, there can be a lot of money in selling energy contracts and as such it is a sad fact that elements of the energy market treat data about customers moving into new premises as a high value commodity.
In fact, this data is so valuable that it has launched a secondary market for people mMoving into a new premises that actively builds and sells this data on a monthly basis to the highest bidder.
Unscrupulous energy brokers, boiler room style energy sales companies or even offshore call centres actively target new mover customers.
The moving into a new premises data comes from innocent sounding surveys from call centres, such as a questionnaire that might include questions around the size of the company and the status of the current energy contracts or official records from company’s house, local authorities or even phone companies that have installed new lines or numbers for new companies which subsequently sell this information on to 3rd party data houses.
As such when moving into a new premises you will suddenly find that you become the target of these organisations trying to convince you to sign a new energy contract with them over the phone, often using at best poor sales tactics, at worst fraudulent activity to convince you into a new contract.
Avoid at all costs as you really don’t know what you are getting yourself into, and you have no way of knowing if it’s a good deal or a bad deal that you are agreeing to.
Worst still they are not required to disclose the commission value to you, so you could find that a large percentage of your bill is actual commission for a greedy salesperson.
They deploy many methods to convince you that you should agree a new contract with them, and you will find the best of these here in our section on the energy scammers.