A Letter of Authority (LOA) is a legal document. It allows your energy broker to request supply information from your current energy supplier. And also to manage your business energy contracts. The extent to which a broker can get involved, depends very much if you agree to sign a Level 1 or a Level 2 Letter of Authority.
First of all, I should make it very clear from the outset, that Perfect Clarity will never ask you to sign a Level 2 Letter of Authority. It will soon be clear why if you read on. A Letter of Authority should clearly outline the business details, and the broker or third party they are giving authority to. It should be signed by the business owner or a director of the company responsible for energy contracts. Worth noting that they are valid for 12 months from the date they are signed.
Level 1 Letter of Authority
When a business asks us to assist with their gas or electricity pricing, we need certain information so we can obtain accurate prices. The customer rarely wants to search around for their information, or wait on the phone to their supplier. So we will do this for them. To do so, we ask them to sign a Level 1 Letter of Authority. This simply gives Perfect Clarity permission to request supply information from their current supplier> It may include the annual consumption for example.
It also gives us authority to request prices from other energy suppliers, which may mean sharing certain information. This will be information the supplier will need to offer prices and may include the MPAN or MPRN. It also allows us to log termination notices with suppliers so the customer can switch energy supplier immediately at the end of their contract. Otherwise they may have to give 30 days notice and pay higher out of contract rates during this period.
Additionally, we are also allowed to resolve any disputes between our customer and their supplier. For example, an incorrect invoice. This saves the customer time and aggravation.
Once the customer has accepted one of the contract terms we have found for them, we will email the contract to the customer. The customer can then review this in their own time before signing and returning the contract. This is the major difference with a Level 2 Letter of Authority.
Level 2 Letter of Authority
This letter of authority allows a third party to actually sign contracts on behalf of the customer. The third party is under no obligation to tell the customer what they have signed them up to. They are in effect acting as a director of the company. And this is the only major difference between the two levels. So why would you sign a Level 2 Letter of Authority that means you don’t get to review the contract before it is signed off?
Many businesses do not realise there are different options available for a Letter of Authority. And this is when they can get into problems with a rogue broker. A Level 2 Letter of Authority allows a company who may not be working in your best interests, to take advantage of your good nature. Unfortunately there are a lot of these companies around in the UK energy market.
At Perfect Clarity, we often come across businesses who have been duped into signing a Level 2 Letter of Authority. Too late, they discover their ‘trusted’ broker has signed off a new contract. Usually this makes the ‘broker’ a lot of commission and is not the best deal for the customer.
If you are unsure whether you have signed a Level 1 or Level 2 Letter of Authority, send it over to us and we will advise you accordingly.
Perfect Clarity can help businesses save money on their energy and water contracts. Call 020 3372 6517 for more information.