Fixed isn’t always fixed, read the fine print!
E.ON SME, who deal with Smaller Electricity and Gas Business Customers, issued guidance 19-Mar-19 that their fixed product will not be truly fixed going forward. Whilst E.ON endeavour to honour prices, they are making changes to their terms and conditions which will permit them to alter prices mid-contract under certain circumstances. Please note, E.ON are not alone in this approach, refer to your contract T&Cs or contact Direct Power for guidance on your specific set up. This change does not impact contracts secured pre-15th April 2019.
Examples of when E.ON or other suppliers for that matter may change their rates mid-contract include but are not limited to the below:
• If new legislation is passed and a new Third Party Charge is introduced.
• If information provided at the time of preparing the quote proves to be incorrect, such as when predicted consumption differs to actual consumption.
• If there is a large and unforeseen non-commodity cost increase.
Going forward E.ON will refer to their contracts as “Fixed Business Plans”. In layman’s terms this mean they fix the commodity cost and reserve the right to make changes should they need to. So their use of the word “fixed” may differ from your personal interpretation! It would be a reluctant decision for a supplier to change prices mid-contract, client backlash and the cost to implement such a change would be damaging to them, so the decision to alter charges would not be taken lightly.
Below is an extract from E.ON’s brief regarding their newly launched product which addresses the common questions around this topic.
Contact Direct Power if you have concerns about your contract and price changes. We are here to help you decipher options and fine print.
FAQs – E.ON’s Small Business Fixed Business Plans from 15-Apr-19
1. Why are E.ON making this change?
Previously, new or unexpected changes were introduced in to the electricity and gas markets and many of our customers had already agreed contracts with us before we knew what these costs were. While some of our competitors reflected them in their customer’s bills, we honoured the prices originally agreed. Due to increased cost volatility and unpredictability of what may change in the future, we can’t sustain this approach. If third party charges were introduced or changed we would carefully consider the right commercial decision before passing on charges to our customers.
2. Is this connected to the small supply failures we have seen across the energy industry?
Yes, this is a factor. There have been a number of small supplier failures across the energy industry, Ofgem expect the remaining energy suppliers to pick up the costs of unpaid Renewable Obligation or Feed in Tariff bills through the mutualisation process which shares these cost across the remaining suppliers. Whilst we have done everything possible to previously avoid passing unforeseen industry or regulatory costs onto our fixed plan customers the scale of these charges means that it is now unfair on our other business customers to absorb them, therefore we may in exceptional circumstances have to pass these costs through. Again, please remember we will always carefully consider if it’s the right commercial decision before passing on charges to our customers.
3. Can I still advise customers your contracts are fully fixed?
No. You must advise we now offer a Fixed Business Plan not – a Fixed Price Plan. You can advise our prices are fixed for the duration of the customers contract unless there are any changes outside of our control. (see below question for more detail).
4. Will my price change during my Fixed Business Plan?
There’s the potential for this to happen. Our prices are fixed for the duration of the customers contract unless there are any changes outside of our control. This could include false or incorrect information being provided, any changes in supply, metering, law, regulation, industry arrangements, the actions of a government body, regulator or third party, and/or any change in the structure or calculation of third party charges. If this happens we may vary the customers prices or pass these on to the customer, we will always notify the customer in writing.
5. Are commodity costs fixed?
Yes, commodity costs are fixed and this won’t change, this is the biggest part of the bill.
6. Can I advise how often the prices will change?
No, there is no set frequency for pass-through pricing. In the event of any change, we’ll always let customers know in advance of any change.
7. Is there a chance the rates will go down?
Yes, this works both ways. It’s very important we stick to the facts, if our customers ask, we need to be clear prices can go up or down.
8. Will we write to customers to advise of any prices increases/decrease?
Yes, all customers will receive a letter detailing what is changing and why, all customers will be given reasonable notice in advance of any change.
9. Will this affect customers who are already in a Fixed Price Plan?
No, this will only come into effect for contracts agreed from the 15th April 2019 or for any customer moving onto Deemed, VPP or OOC rates on that date.
10. Can the customer leave part way through their Fixed Business Plan if they’re unhappy with the pass- through price increase/decrease?
No, the customer can’t leave part way through as they have agreed a Fixed Business Plan.
11. Do we still offer a fully fixed price as well as the new Fixed Business Plan?
No this isn’t something we will offer from 15th April 2019. To ensure we are clear and transparent for our customers we have chosen to change the products name to Fixed Business Plans.
