E.ON opts not to renew deals

13 February 2009

13 February 2009 | Jake Kanter

E.ON UK will not renew gas and electricity contracts with organisations that operate at more than 50 sites and use certain types of meters.

In a letter sent to the organisations and seen by SM, the energy supplier said it would not bid on new contracts with businesses that run at more than 50 sites with either non-half hourly electricity meters, or non-daily metered gas supply.

Readings from non-half hourly meters are based on estimates, whereas half-hourly meters automatically read and produce electricity consumption data every 30 minutes.

"Over the past few months E.ON has undertaken a review of its corporates business in the UK," said the letter. "As a result, we have decided to put the greatest emphasis on the supply of energy to half-hourly gas users and we will withdraw from the large multi-site supply market."

A spokesman for the company said all customers affected by the decision had been notified, but he would not say how many were involved. He added the energy provider's resources, currently used to renew and maintain the multi-site contracts, could be better used on other projects.

Chris Bowden, managing director of energy consultancy Utilyx, said the withdrawal was part of a wider issue that began last year when energy suppliers started "pulling back" from tenders and dramatically increasing the stringency of credit checks payments (News, 30 October 2008).

"Energy companies are saying 'why supply the commercial market when we make significant profits in the domestic one'."

He urged purchasers to prepare a pitch for vendors as to why they should become a customer of choice. "Aggressive negotiations have to give way to a partnering approach."

Eddie Proffitt, gas group chairman of the Major Energy Users' Council, said the decision was "significant" and many buyers that contract with the company would be disappointed.

SMfeb2009

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