Business energy letter of authority (LoA): what it lets someone do

What a letter of authority is

A letter of authority, often shortened to LoA, is a signed document in which you give another person or company permission to deal with your energy supplier for you. Brokers and energy consultants ask for one so they can request your usage data, contract details and prices without you having to be on every call. There is no single legal template, so the wording varies from one firm to another. See the LoA glossary entry for a short definition.

Crucially, an LoA is about permission to ask and discuss. Your energy contract is always between you and a supplier, not the broker. Ofgem's guidance makes the same point about brokers in general.

What an LoA can allow

Each supplier sets its own LoA rules and we have only checked one. Good Energy, which publishes its guidance, lists the following as things an LoA can authorise, within agreed limits:

• asking for and receiving account information, such as usage data and contract details;
• negotiating with energy suppliers;
• handling billing queries and complaints;
• submitting meter readings;
• arranging maintenance or upgrade appointments.

Each supplier sets its own rules. Good Energy, for example, says it does not accept an "Authority to Transact" as part of an LoA. That phrase describes wording that lets someone actually sign or agree a contract for you, which is a far bigger step than asking for information. Treat any document that includes it with great care.

What a good LoA should say

Good Energy's guidance expects an LoA to include the following, and these make sensible checks for any letter you are asked to sign:

Item	What to look for
Your details	Your name and job title, signed by someone with authority (an owner, director or designated signatory)
Business and sites	Full legal name, registered address, company number if you have one, and the specific sites and meter numbers covered
Third party	The legal name, address and contact details of the broker or adviser
Scope	Exactly what actions are authorised, plus any limits or exclusivity
Duration	A clear end date; around 12 months is typical but it varies by agreement
Fees	How the third party is paid: direct billing, commission or a share of savings
Date and signature	Normally on company letterhead

The risks

An LoA is not dangerous in itself, but a badly worded or unexplained one can cause problems.

• Too broad. "All dealings with all suppliers for all sites" is wider than most jobs need.
• No end date. Without a stated duration, it may never expire.
• Exclusivity. Some letters stop you using anyone else to get quotes during the period. Check for that wording.
• Hidden fees. A letter that mentions a fee or commission should say how much, or how it is calculated. Broker costs recovered through your bill must appear in the Principal Terms of the contract (for microbusiness contracts from 1 October 2022, and for all non-domestic contracts from 1 October 2024).
• Cold-call pressure. Be wary of anyone who rings out of the blue claiming to be from your supplier or to be about a "government scheme". See why you get cold calls about business energy.

Ofgem warns that scammers have claimed Ofgem has forced brokers to repay commission, and that it has no power to require this. Never sign a letter of authority, or pay an upfront fee, for a claim to recover commission without independent advice.

Worked example

A salon owner is cold-called by a firm offering "a free review of your energy costs". They send a one-page LoA. Before signing, the owner checks it against the table above and notices three things: no end date, authority to "negotiate and agree terms", and no mention of how the firm is paid. The owner asks for a version that (1) covers one named site and the two meter numbers, (2) lasts 3 months, (3) allows requesting usage and contract information and obtaining quotes only, and (4) states the fee in pounds. If the firm will not agree, the owner declines. Nothing has been lost, and the owner can still get quotes from other sources. This kind of tightening is reasonable to ask for and a legitimate adviser should accept it.

How to limit an LoA safely

• Name the sites and meters. Use the MPAN and MPRN, not "all my sites". See how to find your MPAN and MPRN.
• Cap the time. Three to twelve months is common. Diarise the end date.
• Exclude signing. Say in writing that the broker may not agree or change a contract on your behalf, and that any contract needs your own signature.
• Get fees in writing. And ask what the supplier would add to your rates.
• Keep a copy and a record of who you gave it to.

Ending an LoA

The official guidance we found does not set out a single formal revocation process, so the safest course is to write to both the broker and the supplier stating that the authority ends from a given date, and ask the supplier to confirm it has removed the broker's access. Keep the confirmation. If the broker keeps acting after that, complain in writing, and if it is not resolved you can escalate to the broker's dispute scheme. Microbusiness brokers should be signed up to a Qualifying Dispute Settlement Scheme (see what is a QDSS) and the Energy Ombudsman can consider complaints about brokers too. See complaining about a broker to the Ombudsman.

Do you always need one?

No. You can get quotes yourself by supplying your meter numbers and usage, and you can contact suppliers directly. An LoA saves time but is not required to compare prices. Our page on whether it is safe to sign a letter of authority goes through the decision, and choosing a broker covers how to pick one.

Next steps

1. Read the document line by line. Ask what each clause means.
2. Strike out signing authority, add meter numbers and an end date.
3. Get fees in writing before you sign.
4. Keep a copy and diarise the expiry.
5. Write to end it when the job is done.