Ofgem plan to protect pubs

Pubs would get more protection against being charged penalties when switching energy supplier under new plans being considered.

A new consultation from energy regulator Ofgem proposes measures that could stop licensees facing stiff penalties after falling foul of "win-back" contracts.

Energy watchdog Energywatch said pubs were increasingly falling foul of those penalties. The problem comes when licensees or operators agree to switch supplier after they are offered a cheaper rate, but then change their mind when their original supplier offers a better deal.

In this situation, they have contracts with both suppliers and are forced to pay a penalty charge to one company to leave their contract.

These agreements take place in the five-day window after the new supplier registers this new supply.

Under Ofgem's plans, as long as the licensee has paid the bills, the original supplier would be banned from approaching them during this five-day window.

Ofgem's proposals could also make it easier for pubs to switch energy provider without the current supplier blocking the move with an objection.

The supplier would only be able to object if the right to do so is written into the existing contract. And it would need a specific reasons for objecting - for example, as a result of a debt.

A spokesman for the Utilities Intermediaries Association, which represents energy agents, said: "These changes would help licensees because suppliers would be encouraged to make their best offer first time round."

He stressed the need for licensees to read their contracts carefully and understand the clauses that allow suppliers to object to switching contracts.

Ofgem's consultation ends on 7 September. See www.ofgem.com and click on the "live consultations" bar.

The MA is calling for the plug to be pulled on unscrupulous salesmen who sell gas and electricity to pubs - through its Action on Energy Rogues campaign. For many months, the MA has reported that rogue agents are using underhand tactics to tie licensees into onerous contracts.

l See pages 24 and 25 for the latest campaign news

fighting back

A licensee avoided paying Opus Energy £1,500 in penalty charges for leaving her contract by arguing that the charge was unjust.

In April, Bridget Bates switched electricity supplier 15 months into her three-year contract with Opus.

The licensee of the Anvil Inn at Congham, Norfolk, complained about steep price rises - monthly bills started at £170 but increased to £225, £329, then £550.

Opus wanted to charge a penalty of £1,500 to leave, but Bates used the Unfair Terms in Consumer Contracts Regulations 1999 to argue that the charge was not valid.

The regulations, which say profits cannot be made from penalties, have been used by licensees to claw back penalty charges from banks in the past. Bates, who has worked in banking, urged other Opus customers with penalty charges to follow suit.

She said: "Every week I phoned up Opus about this. Whether they got bored with us, or realised that we weren't going to give up, I don't know."