Q. What is an LOA?
A. An LOA, a Letter of Authority you sign, giving the broker your permission to obtain data from your supplier. It is required under Data Protection laws. Without it, your current supplier will not provide the information needed to tender your requirement.
BEWARE. Many unscrupulous brokers ask you to sign an LOA that allows them to sign you into legally binding contracts without your knowledge. BEWARE.
We are very sensitive to ethical practice. Not least, as we serve the not-for-profit sector and appreciate the value every penny brings, to the amazing organisations whose energy contracts we manage.However, it never ceases to amaze us, how often organisations are taken advantage of by unscrupulous brokers. Brokers, whose LOA's are deliberately worded so as to demand exclusivity, or allowing them to enter into contracts on the customers behalf. This is poor practice.
So, we thought it would be helpful to explain the purpose of an LOA, why it is needed, and what you should and shouldn't sign.
- When you appoint an energy broker to act on your behalf, it is a legal requirement for the broker to obtain from you, a signed Letter of Authority, otherwise known as an LOA.
- In providing the LOA, you are enabling the energy broker to access information from your existing suppliers including: consumption data, contract end dates and contract prices.
- The energy broker will normally provide a template of the LOA for you to put onto your own letterhead, sign and return. Please note, that both EON and British Gas (BG) require specific LOA's over and above the brokers LOA. Dependent upon who your energy suppliers are, you may need to sign all three LOA's.
- Without an LOA, an energy broker will not be able to obtain details of your current annual consumption or other contract information, such as contract end date (CED), from your existing supplier. This means they will not be able to provide you with accurate prices. If they tell you otherwise, they are wrong. Perhaps more importantly, incorrect information can lead to delayed start dates or even failed contracts, which is costly to you the customer.
- The LOA is a legal requirement, as your information is protected under the Data Protection Act. As such, your supplier is not able to disclose this information without your express permission.
- If you sign an exclusive LOA then other brokers will not be able to compete for your business throughout the validity period of the LOA. This means that you will end up paying higher prices than you need to. Guaranteed!
- If you sign an LOA that authorises the energy broker to enter into contracts on your behalf, then you are taking the decision making away from your organisation and giving it to a third party. This is akin to giving the keys to the chicken shed to the big bad fox. Nothing good will ever come of this!
Please. Always read the LOA carefully! Our advice?
DO NOT SIGN an LOA that is "exclusive". Good energy brokers don't need exclusivity as they aren't afraid of competition.
DO NOT SIGN an LOA that allows your energy broker to "enter into contracts on your behalf". Ethical brokers don't take decisions that impact your business. They only take decisions that impact their own.
We spend countless hours helping customers through the process.
If you would like to talk more about LOA's, please call any one of our offices
. We are here to help.
Q. Do you have OJEU Accreditation?
A. Yes, Utility Aid have their own framework, OJEU reference 2015-078688 applies. For further information please contact firstname.lastname@example.org
Q. Does the LOA cover both Electricity and Gas?
A. The LOA applies to the Broker/Supplier and not the meter. The Broker will use the same LOA even if you have Gas with one supplier and Electricity with another. Unless of course, you are contracted to EON and/or BG, in which case you might need to complete all three LOA's
Q. Why do you need to know my contract end date?
A. Suppliers need to know when your existing agreement ends, as the date a new contract starts has an impact on the price. For example, Gas prices for contracts starting one month ahead, are usually different from contracts starting six months ahead
Q. Why do suppliers need to know the annual quantity of energy I use?
A. Prices quoted generally depend on the volume consumed. For example, an organization with an annual consumption of 100,000 units will typically be paying more per unit, than one that consumes 300,000 units per annum
Q. What do I do if my organisation doesn't have a letterhead?
A. Copy the template onto plain paper and add your organisations details to the top where appropriate. If you have a company stamp, you should apply this also
Q. Does the Energy Broker need exclusivity to obtain the best deal for us?
A. The simple answer is no. If an Energy Broker demands exclusivity then you need to ask yourself why. Our advice? Change broker
Q. Does the Energy Broker need to have the authority to enter contracts on our behalf?
A. No and the energy broker should never be allowed to place contracts on your behalf. Ask yourself this. In any other circumstances, would you ever let someone else sign you into a contract without you knowing about it?
Q. How long is the LOA valid for?
A. Suppliers normally permit LOA's to be valid for one year from the date of signing. However, we have come across instances where Broker LOA's are valid for two plus years. The legality of these extended LOA's is unknown