What is a rollover contract and how long can it last?
A rollover contract is a new fixed term that starts automatically when your old one ends, on terms your supplier sets. A rollover can't be longer than 12 months, and the supplier may only do it if it has met the renewal information rules and you haven't given notice.
What a rollover actually is
A rollover (sometimes called an auto-renewal) happens when your fixed-term contract ends and the supplier starts you on a new fixed term instead of waiting for you to choose. The new price is whatever the supplier offers, which may be well above the market. See our fuller guide to rollover business energy contracts.
How long can it last?
Under Ofgem's rules (licence condition 7A, as described in its microbusiness decision), a supplier may roll over a fixed term only if three things are true:
- It has provided the renewal information required, including a Statement of Renewal Terms and Principal Terms.
- You haven't served notice stopping the renewal.
- The rollover is 12 months or less.
So 12 months is the ceiling. A shorter rollover is allowed. A 24-month rollover is not.
Rollover is not the same as out-of-contract
| Rollover | Out-of-contract | |
|---|---|---|
| What happens | A new fixed term starts | You carry on with no fixed term |
| Exit fee | May apply; check the terms | No termination fee |
| Notice to leave (microbusiness) | Depends on the contract | You can't be required to give notice, except under an evergreen contract (up to 30 days) |
See the glossary entries for out-of-contract rate and evergreen contract.
What it can cost: an illustration
Suppose a café uses 30,000 kWh of electricity a year and is rolled onto 30p/kWh, when a quote at 27p/kWh was available.
30,000 × £0.30 = £9,000, versus 30,000 × £0.27 = £8,100. That is £900 more over the year, before standing charges. These prices are examples, not quotes.
How to avoid being rolled over
- Know your end date: find your contract end date.
- Read the renewal letter when it arrives.
- Give notice in time. For microbusinesses, Ofgem's rules since April 2015 stop a supplier requiring notice more than 30 days before the end of a fixed term, so check your contract for the exact deadline and follow how to stop your contract rolling over.
What to look for in your own paperwork
Find the clause that mentions renewal, extension or continuation. It may use words such as "automatically renew". Then check three things: the length of any new term, the price basis (a published rate, or one set at renewal), and how you give notice.
Also look at what the renewal letter shows. For a microbusiness on a fixed term, Ofgem's 2014 decision says it must set out current prices and annual consumption, which gives you something to compare against other quotes.
If your contract has already rolled, the new term may carry its own exit fee. Get the figure in writing before deciding to leave.
Quick checklist
- Do I know my end date for each fuel?
- Does my contract mention automatic renewal, and for how long?
- Have I received a renewal letter showing current prices and annual usage?
- Do I have one rival quote to compare it with?
If you can answer all four, you are in a strong position to stop an unwanted rollover.
Next steps
Check your contract for an auto-renewal clause today and diarise the deadline.
Sources
General information only. Energy prices, rules and supplier terms change; check the latest position with your supplier, Ofgem or the Energy Ombudsman before you act.