Licensees warned over utility contract charges

by Ewan Turney

Licensees have been warned not to let their utility contracts lapse because they could face mammoth charges.

The warning comes as one West Midlands tenant finds himself struggling to pay off a gas bill of £1,196.50 and unable to change service provider until he does so. Malcolm Burrows of the Victoria Inn in Halesowen said he had 'overlooked his contract renewal because it was the least of his worries at the time as he was considering leaving the pub.

Burrows has urged others to be vigilant to avoid falling into the same trap.

His contract with Elf Business Energy expired on 31 January and so he has been charged an out-of-contract rate, known as a deemed contract, which is almost double the price per unit. The price has soared from 1.799p per unit to 3.2297p.

'Every new licensee could fall into the same trap, he warned. 'They post you a new contract but they don't call you. I would have expected them to be hounding me to renew but they treat you being out of contract as a licence to print money. They rub their hands together and it's amazing they are allowed to do this.

A spokeswoman for Elf Business Energy said that its sales team had issued renewal notifications on 11 November 2004 and again on 14 January 2005 but no response had been received.

A spokeswoman for gas and electricity watchdog Energy-watch said: 'Being on a deemed contract is more expensive as the supplier will charge a higher tariff rate and may not offer the same flexibility when it comes to payment arrangements. It is in your interests to agree a contract with a supplier as soon as possible.