Switching Energy Supplier (Force Majeure)
Key Contact: Declan Goodwin
Author: Rachel McCulloch
Can my business change energy supplier?
We are in the midst of an energy crisis with energy prices soaring and businesses seeing their energy bills rise higher and higher. Wholesale gas prices have risen by 250% between January 2021 and January 2022, and there is nothing to suggest that this upward trend will go away any time soon. Businesses are not protected by a price cap and so the surge in energy prices can eat into profits and force businesses to pass the cost onto their customers just to survive.
What can I do about my increasing energy costs?
Alongside practical ideas to simply use less energy, such as turning down thermostats, fitting energy efficient lighting or motion sensors, a review of your contract with your current energy provider could lead to savings. You may be able to identify grounds for renegotiating new terms or even terminating your current contract, such as by relying on a force majeure clause. One way to reduce the cost of your energy bill may be to end your current contract (if possible) and switch energy supplier.
Can I rely on force majeure to end my current energy contract?
Force majeure is a clause commonly found within commercial contracts. A force majeure event is an event that occurs which is beyond the control of the affected party. The affected party may then be able to rely on force majeure to be excused from some or all of their obligations under the contract. Usually, the clause will state that after a period of time, if performance of the obligations cannot be resumed then the parties may terminate the contract.
Force majeure clauses will usually include a list of events which can trigger the relief provided under a force majeure clause. These events typically include war, epidemic and pandemic. Energy suppliers may take the view that energy price rises will always be foreseeable, meaning price rises do not amount to an event of force majeure. However, the drafting of the force majeure clause may allow for wider application, particularly considering the reasons for the current price increases (including a war and a pandemic).
Whether you will be able to rely on force majeure to end your energy contract will depend on the precise wording of the force majeure clause, so this will need to be considered on a case-by-case basis. You shouldn’t assume that you can rely on force majeure to end your energy contract and we would recommend you consider obtaining legal advice before attempting to end your contract in this way.
For further information and assistance, please contact our Commercial and Technology Team.