Ombudsman Services
We’ve recently received complaints from the customers of some non-domestic energy suppliers who have seen their energy prices increase, despite them believing that they were on a fixed contract. We thought it would be helpful to share the approach we have decided to take for such complaints.
We have some general concerns about suppliers varying the price of fixed contracts. We think that the headline offer of a fixed contract creates an expectation among customers that their prices won’t change for the duration of a contract and we therefore can understand why some customers feel it unfair that a price increase has been imposed.
We are, however, also aware that while domestic suppliers are prohibited from including terms within their fixed contracts that allow for price variation, no such prohibition currently exists for non-domestic suppliers. We understand that there are factors that exist in the non-domestic market that would increase the risks associated with an energy supplier offering a fixed contract without any provision for price variation– for example, the fact that some businesses will use significantly more energy than the average domestic consumer, thus magnifying potential losses.
So, taking all factors into consideration, we’re of the view that suppliers are entitled to include price variation terms within fixed contracts as long as:
any such terms should only allow the supplier to vary the terms in limited and exceptional circumstances that do not act to undermine the headline offer of a fixed price. We consider, for example, that it’s reasonable for suppliers to include a term allowing price variation in the event the customer uses significantly more energy than expected, or if VAT or other such charges which are outside the direct control of the supplier increase. We do not, however, consider a term allowing a supplier to increase charges if wholesale costs increase to be consistent with the offer of a fixed contract.
suppliers have provided clear, upfront information about the fact that their fixed price might be varied before a customer enters into a fixed contract. We are of the view that information about how the tariff works – including the circumstances in which prices can be varied – should be included in the Principal Terms which should be provided to the customer before a contract is agreed.
If suppliers would like to discuss our approach to fixed contract price rises, please let us know.