Plan to protect pubs from energy penalties

Pubs would get more protection against being stung with penalties when switching energy supplier under new plans being considered.

A new consultation from energy regulator Ofgem proposes measures that could stop licensees facing stiff penalties after falling foul of "win-back" contracts.

Energy watchdog Energywatch has previously warned that pubs are increasingly falling foul of these penalties. The problem comes when licensees or operators agree to switch supplier after they are offered a cheaper rate, but then change their mind when their original supplier offers a better deal.

In this situation, they have contracts with both suppliers and are forced to pay a penalty charge to one company to leave their contract.

These agreements take place in the five-day window after the new supplier registers this new supply. Under Ofgem's plans, as long as the licensee has paid the bills, the original supplier would be banned from approaching them during this five-day window.

Ofgem's proposals could also make it easier for pubs to switch energy provider without the current supplier blocking the move with an objection.

The supplier would only be able to object if the right to do so is written into the existing contract. And it would have to give specific reasons for objecting - for example, as a result of a debt.

A spokesman for the Utilities Intermediaries Association, which represents energy agents, said: "These changes would help licensees because suppliers would be encouraged to make their best offer first time round." ​He stressed the need for licensees to read their contracts and understand the clauses that allow suppliers to object to switching contracts.

Ofgem's consultation ends on 7 September - view details​