How the European Union is acting like energy companies.
The more I see about Brexit the more the EU is acting like an energy company when it comes to commercial contracts.
If you are a business and you have a contract for your phone, mobile phone, broadband, gas or electricity then you could easily suffer the rollover trap.
Under the terms and conditions of such contracts, you can only tell your supplier during a narrow window period that you want to cancel–at a time of their choosing, not yours. If you don’t they can legally extend the contract as long as they want to and raise the rates as much as they want. Either that or they put the customer in default out of contract rates which are horrendous.
It's caused many businesses to fold. Like this article about the Fat Olive in Ormskirk. I warned them but they didn’t listen. (1.)
Most business owners do not know the dates of their contract end dates and don’t have the time to deal with this. The energy companies inform the customer at the start of the contract and often put the details on the online account. However, they know that most customers won’t log in. They offer the customer a nominal saving if they go for bills to be emailed as opposed to sent in the post. They know that most such customers won’t read their energy bills that are sent by email.
If you try and leave outside that window period then they get really awkward. They will usually ask for the cost of the estimated bill between now and the end of the contract to be paid in one go and then you can leave. This is exactly the same way that the EU gave us the power to leave if we paid £39 billion. (2.)
How do I get companies out of the rollover trap?
I get the customer to fill in a letter of authority and give me a copy of all the bills. That allows us to find out when your contract end dates are and when your window period is. It doesn’t allow us to do anymore than that. Many business owners do not know when their dates are. You may be one of them.
Now even if you know your dates as soon as they receive this letter of authority they start to panic because they realise that there is a high chance you may leave them and you have a broker on your side. Things are very different when you have a broker on your side. The utility company knows that they can’t pull the wool over your eyes.
Consider this. Some self-employed people have said that they will do this themselves. Let's assume you want to earn £20,000 this year. Most self-employed people work 70 hours a week but you are only productive for half of those. Let's assume you work for 48 weeks a year. That means your time is worth £11.90 an hour. Let's make it £12 an hour to make it easier to calculate. To phone all the UK’s 18 electricity suppliers and 25 gas companies would take you about two days. Would you pay someone £12 an hour for 8 hours a day for 2 days to do this? In other words, would you pay someone £192 for this? Then why would you do it?
I know this because one person who refused to use our service did this and he still couldn’t get the same price we could. Those 16 hours would have been better spent trying to get new customers. Conversely, some of the more clued up traders have just outsourced this to my team to handle.
You could use a price comparison website. However, they won’t remind you of the rollover trap and the rates they give you are often subject to fair use and fair use is a very grey area. With a brokerage company, a contract is negotiated taking into account your occupation. I have lost count of the number of business owners who have been stung by price comparison websites, offering cheap prices only to be stung by “fair use” and then who forget about the rollover trap.
Let me give you an example. There was one café owner I approached about this. He had just opened. He had no idea who his supplier was. I found out who his supplier was. I got the details sent out to him. He was in out of contract rates which were horrific. We tendered and the same supplier offered a much lower price and offered to backdate the prices and the prices would be fixed for 3 years.
He told me that he’d gone to a price comparison site and one supplier had offered him a cheaper price than we’d got for him- in theory. I told him that they’d pull the wool over this eyes but didn’t listen.
A changeover would take 6–8 weeks. He’d be paying out of contract rates for 6–8 weeks. He’d then moved to the new supplier and those prices were subject to fair use. Worse still without a broker, he’d be subject to the rollover trap. Less than 12 months later his café closed. I saw him and he told me that the final bill from the first company was so high he couldn’t pay it off and so they wouldn’t release him to a new supplier. They kept him in a contract whose rates were much higher than the one we’d negotiated and then he was rolled over into a new contract without him knowing.
At the appropriate time on the customer’s authority, we terminate the supply contract and tender to the open market. It is common for the current supplier to offer the customer one price but through a broker the same price but between 1/4 and 1/3rd lower.
You will not believe what the energy companies try and do in order to keep the customers, including the higher priced paying ones. The UK is one of the EU’s biggest net contributors. They stand to lose between 1/10–1/4 of their net income when we leave.
Why Brexit didn’t work.
The people of Britain said that they wanted to leave in June 2016.
The ballot paper was very clear-leave or remain.
The British government failed to find out when the contract ended and send in an appropriate termination letter. An energy company will not let you leave if you are in arrears to them or in contract with them.
The problem has always been that before Prime Minister Boris Johnson came along that we have not terminated our contract with them. The UK government never repealed the European Communities Act 1972.
Under this law, the UK Parliament passed the European Communities Act. It gave direct effect to EU law and meant that if there was a conflict between an act of the British Parliament and EU law, Parliament lost out and EU law prevailed (4.)
In October 2016 the UK government announced it was going to repeal the act (5.) It never did until August 2019 (6.)
Now we are no longer in contract with the EU and there is nothing they can do to stop us leaving without a deal.
Had we done so in June 2016 then we would have saved some 3 years of the £50 million a day we pay the EU i.e. a minimum of £54,750,000,000,
You just think what we could have done with that money!
Conclusion
If you are a self-employed business owner contact an energy broker like me to ensure that you never get stung by the rollover trap. You can see how much it can cost you!
If you are a UK voter, ensure you get good government!
Bibliography
- Rising costs have killed our business Ormskirk advertiser Thursday 11 June 2015 https://www.dropbox.com/s/unzlm0trjnhvc58/FAT%20OLIVE.pdf?dl=0
- European Union (Withdrawal) Act 2018 http://www.legislation.gov.uk/ukpga/2018/16/contents/enacted/data.htm?view=plain
- EU Referendum Ballot paper
- Reality Check: Did the UK lose its sovereignty in 1972 https://www.bbc.co.uk/news/business-35766434
- Government announces end of European Communities Act https://www.gov.uk/government/news/government-announces-end-of-european-communities-act
- Brexit Secretary signs order to scrap 1972 Brussels Act — ending all EU law in the UK https://www.gov.uk/government/news/brexit-secretary-signs-order-to-scrap-1972-brussels-act-ending-all-eu-law-in-the-uk
