Benefit periods and contract terms—how do they work?
When you’re comparing plans, sometimes it’s hard to tell the difference between a plan with a benefit period, and a plan with a contract term. Here’s how they work.
Ongoing contract with benefit period
As the name suggests, when a plan has a benefit period, it means that you get a particular “benefit” for a set period. Usually the benefit is a discount, but it can also be items like movie tickets or magazine subscriptions.
When the benefit period ends, often the contract keeps going at the same prices but you no longer get the benefit. If this is the case, your retailer has to tell you the benefit is ending at least 20 business days (but not earlier than 40 business days) before it happens. This will give you time to consider your options and you may want to look around to see what other retailers offer by visiting Energy Made Easy (EME) or ask your current retailer if they’ve got a better plan.
Sometimes retailers automatically apply a new benefit period when your first benefit period ends, so you keep receiving a discount. If your retailer is just extending or rolling over the same benefit, they do not need to separately notify you. However if a new benefit is applied but it is different to the first one, or there are changes to the current benefit you’re receiving, your retailer has to tell you at least 20 business days (but not earlier than 40 business days) before it happens. This will give you time to consider your options including looking at other plans that may suit you better.
If you want to leave the contract, be sure to check if you have to pay any fees, such as exit fees, to leave. Also, be sure to talk to your retailer if you don’t want to be locked in to the contract. If the issue does not get resolved you can contact your local energy Ombudsman.
Contracts with a term
When a plan has a contract term—such as one, two, or three years—it means the contract ends when the term finishes.
Prices can change while you are on this kind of contract. However, some retailers do have plans where the prices are fixed during the contract term.
There may be an exit fee if you leave your contract during the contract term.
When the contract term ends, your retailer will usually put you onto their local standing offer. Standing offers have no discounts and no exit fees, and the rates are usually higher.
Plans with no contract term
These are plans without a contract term or benefit period, although you may still get a discount or other benefit.
These plans continue until you or the retailer decide to end it.
Usually, plans with no contract term don’t have fixed prices. Prices can change at any time, and your retailer must notify you no later than your next bill.