Top tips for requesting renegotiation with energy suppliers

UKH recently highlighted its #FiveAsksForOfgem in response to the energy regulator’s non-domestic market review.

The asks urged Ofgem to move rapidly to fulfil its recommendation to encourage suppliers to work with hospitality businesses to resolve issues many face with prices fixed at levels far above the current market rates.

It also called for Ofgem to urgently enact its proposed changes to offer greater transparency to customers, deliver more timely responses to customer complaints and drive better practice in setting deemed rates.

In addition, UKH asked Ofgem to deliver wider access to the energy ombudsman to redress the imbalance of power between energy suppliers and businesses as well as put in place measures to prevent the blacklisting of entire sectors, particularly hospitality.

The fifth ask was to improve regulation of energy brokers and the introduction of a formal redress scheme and greater transparency around fees.

UKH’s four top tips on renegotiation are:

1. Be proactive​ – Let’s be honest, your energy supplier is not going to come to you to offer a renegotiation. Starting a conversation with your supplier about your contract is the only way it can be improved.
2. Ofgem’s review is your ally​ – Be explicit in referring to Ofgem’s recommendations, following its review into the non-domestic energy market. Ofgem said they expect suppliers to work proactively with their customers to help them adapt to challenging circumstances and to support them wherever possible. Referencing this clear direction from the regulator should help with your request.
3. Don’t assume knowledge​ – As you’re writing to request a renegotiation, it’s almost certain your fixed contract price is far higher than current market prices. Be explicit about that fact and offer examples. You should be clear about the discrepancy between what you’re paying and what is on the market at the moment. 
4. Be specific​ – You need to have specific requests included in your letter. Simply requesting support, while entirely valid, is too broad. You may want to request a reduction in the fixed rate for the remainder of your contract or spreading the remainder of your payments over a longer period – a so-called ‘blend and extend’ arrangement.

Moreover, UKH has also put together a template letter​ from operators to energy suppliers.

Re: Contract <ref number>

Dear <supplier>

I am writing to request an urgent renegotiation of the above energy contract following the recent fall in wholesale energy prices, publication of the Ofgem recommendations​ in July and support from Government for renegotiations. As a supplier you are able to purchase energy at a much lower price than that which you have fixed in my contract.

While I appreciate you will have already purchased some of the energy that you are providing to me, you will be benefiting from reduced prices now. Furthermore, the risk premium that seems to have been applied to hospitality businesses provides you with a margin to reduce my prices.

The recent Ofgem review stated their clear message that they expect suppliers to work proactively with their customers and, within their commercial confines, adapt to the difficult circumstances of individual customers to support them wherever possible​.

It also found numerous failings in the non-domestic market. This included accounts of customers struggling to contract with energy suppliers, poor customer service, and larger price hikes than seem necessary. It identified unjustified increases in standing charges, unnecessarily high deposit requests and a lack of competition in the market, particularly for hospitality.

In light of these findings and recommendations, we believe that as my energy supplier you should reconsider the terms of our agreement and adjust the price accordingly.

 In response to this I would like to renegotiate our contract. I would like to see the following revised:

<delete/amend as applicable>

• A reduction in the fixed rate for the remainder of my contract

• Termination of my existing contract and a new contract based on current market prices • A cut to the level of my standing charge

• A return of my deposit, in part or in full, to the business

• A spreading of the remainder of my payments over a longer period – so called ‘blend and extend’

I would appreciate an answer at your earliest convenience as the excessive level of energy price I am paying is having a material impact on the impact of my business and is affecting other business decisions – such as staffing and investment.

Yours…