== The price of power, the abuse of power ==
Every week retailers ring me with a complaint about a sudden horrendous hike in their energy bill - none of them expected. As was the case with Tony Vann who runs Woodlands Stop & Shop and BP petrol station in Harrogate. Two years ago he read my recommendation of energy broker Energyhelpline. The broker (part of the Make It Cheaper group) got him a decent rate with Scottish Power.
In November Scottish Power wrote to him to say prices were going up but they could promise him a really good deal if he signed up for another two years. He didn’t fancy that but did agree to renew the contract until September.
Then came the bill which showed he had been moved from a day rate of 5.35p per unit to 12.20. The night rate had gone from 3.21 to 8.32. "The trouble is the letter didn’t tell me what I was paying before. I was paying £1,000 a month, now it’s two-and-a-half times that," says Tony.
He went back to Make It Cheaper and the company confirmed it could have got him a rate of 4.57. and 7.57. I also contacted Make It Cheaper and they clarified the situation. Spokesman Nick Heath said that they do make an effort to contact people at renewal time. He said: "Mr Vann was told by the consultant at the time that SP would be offering him a renewal quote towards the end of the contract term and it was implied that he should get back in touch with us at that point. With hindsight we could have been more explicit about what he needed to do to avoid a rollover - ie serve notice. We’re sorry that this resulted in Mr Vann being rolled by SP but do not consider that this constitutes a failing of our service agreement.
"However, since then, we have significantly improved processes here so that customers are much less likely to get rolled."
Nick further explained that all energy suppliers have different rules for termination. "Where possible, we recommend the customer serves notice on the new contract as soon as it is agreed so there is no danger of getting rolled at the end."
But it isn’t always that simple. As well as there being a very narrow window in which one can terminate a contract, three of the ’big six’ now refuse to accept any attempts to terminate contracts if they are made prior to the renewal window.
Make it Cheaper (which incidentally doesn’t charge retailers for its services but takes it off the supplier) offers template termination letters that customers can use to ensure there is no misunderstanding between the customer and the supplier.
It has launched a renewal reminder service (www.makeitcheaper.com/planahead.asp) that logs customer details and automatically contacts them as their renewal window opens.
And it gets better: "We are currently recruiting a ’renewals team’ whose job it is to ring customers during the renewal window to underline the importance of serving notice."
Nick also sent me an extract from one energy supplier’s terms and conditions showing just how hard it is to leave. Read carefully:
"... the review starts 120 days before the end of the Contract. This is also the earliest opportunity for you to notify us of your desire to end the Contract. We will write to you with our offer within the first 60 days of the review and this offer will be valid for 21 days from the date of our letter. The expiry of the 21 days is the last opportunity for you to notify us of your desire to end the Contract."
The main reason they couldn’t help Tony was that he had more or less dealt directly with Scottish Power (SP) after receiving, and responding to, the sneaky letter.
To escape a further rollover by SP, Tony now needs to send a termination letter to them during his renewal window - which opens 60 days before the contract end date and closes 45 days before the end date. "We believe the end date to be August 31, 2009 but he should clarify that with his supplier," adds Nick.
"The prices charged to businesses whose energy contracts automatically renew are roughly double those that suppliers offer to attract ’new customers’, eg currently 16p/unit versus 8p/unit for electricity but we have seen them as high as 32p/unit)."
There was an awful lot more information like this but I haven’t room for it all. If you want to know more then join the 2,000 who call the company each week with price enquiries or the 1,000 a week who have new contracts arranged.
Freephone 0800 970 0225 or visit www.makeitcheaper.com
== Free car wash mystery solved ==
My story about an independent retailer visiting a London garage to top up his mobile phone, only to be offered a free ’gold car wash’ worth £8 if he spent £20 on any network, led to him asking how the garage could afford this promotion as £20-worth of mobile credit only equalled 80p profit (it’s gone down since).
Michael Harris of WashTec got in touch to point out why providing a good car wash service offers such potential for profit, making such a promotion affordable.
"The variable cost to an operator of an automatic car wash is generally under 80p per wash. Yet with top washes typically sold at between £6 and £9, the attraction of gaining new customers through cross-promotions speaks for itself. An automatic car wash remains one of the most profitable activities for forecourt operators and a good cross-promotion will help them differentiate themselves from local hand wash competition."
Hooray to that.