Tom Melhuish 6 min read

What is a business energy letter of authority (LOA)?

In the UK, most companies use business energy brokers to help them secure the best deals. To work with a broker, you’ll need to sign a Letter of Authority (“LOA”) that grants your broker the legal power to act on behalf of your business in negotiations with suppliers.

When signing an LOA, it’s essential that you trust your broker to act in your best interests and that you understand exactly what you are authorising your broker to do. In the fine print of LOAs, there are nuances and pitfalls to look out for, so we’ve prepared this comprehensive guide to the LOA.

Contents

Business energy LOA:

i. Permissions
ii. What to look out for?
iii. Template

Business water LOA:

i. Permissions
ii.What to look out for?
iii. Template

What is an LOA for business energy?

A business energy LOA is a legal document that authorises a business energy broker you are working with to facilitate:

The transfer of your energy supplies to a new commercial electricity or business gas supplier; or
The renewal or renegotiation of your business energy tariff with your current energy supplier.

Business Energy Broker LOA permissions

When working with a business energy broker, it is important to be aware of the two different types of Letter of Authority (LOA):

Level 1 Business Energy LOA

A Level 1 LOA allows a business energy broker to carry out all necessary actions to facilitate your business energy switch once you have signed a new business energy contract.

The Level 1 Business Energy LOA permits your broker to:

Access industry-held data, including consumptions, contract end dates, and metering information.
Contact your current supplier to resolve any issues and authorise any required adjustments, refunds, or amendments to your business energy bills.
Issue termination notices should the need arise and opt out of future business energy contract renewals on your behalf.

The key point is that the permissions in a Level 1 LOA are limited; you have not given your broker permission to enter into business energy tariffs on your behalf. To see the exact wording, see the level 1 business energy broker permissions in the template below.

Level 2 Business Energy LOA – Autorenewal

A Level 2 Business Energy LOA grants your broker all the permissions included in a Level 1 LOA but goes a lot further. Specifically, a Level 2 LOA authorises your broker to sign up for new business energy contracts on your behalf.

To view the exact wording, see the level 2 business energy broker permissions in the template below.

What to look out for with a business energy LOA

A Level 2 business energy LOA is often branded as an auto-renewal service and is typically used to allow your broker to sign up for a new contract when your current business energy tariff is coming to an end.

Autorenewal services can take the hassle out of managing your business energy contracts, but they may result in your business being locked into a lengthy fixed energy tariff that may not suit your needs or being stuck with a supplier known for poor customer service.

Awareness is crucial when you agree to an auto-renewal clause within your LOA. If this is not your preference, inform your broker that you want the clause removed before you sign their LOA.

Business Energy LOA template

The following template shows the standard form of a letter of authority that is accepted by one of the biggest business energy suppliers, SSE.

Please note that different business energy brokers typically use slightly different forms of this LOA, and you should always read it carefully before signing.

Standard busienss energy LOA template:

[Your company details]

I confirm that [Broker’s legal name] is acting on my behalf, and I authorise the energy supplier to action my account with them as follows:

[Delete permissions as appropriate]

Level 1 business energy broker permissions:

Request and receive current and historical account information including: consumption
history, supply numbers, pricing details, contract end dates.
Issue termination notice about existing supply contracts/opt out from future automatic
contract renewals on my behalf.
Obtain information from third-party industry databases e.g. metering details.
The Energy Supplier or TPI to be able to contact my supplier to resolve any objections or
rejections regarding my transfer.
Request and negotiate prices on my behalf.

Level 2 business energy broker permissions:

All the items set out in Level 1, as well as the following:

Authorise any adjustments, refunds or billing.
Agree supply contracts on my behalf.
Authorise the completion and submission of VAT declarations.

Terms of letter of authority

This letter of authority shall remain valid from the longer of the date of signature for one year, or the length of the attached contract.

[Company authorised signatory]

Extracted from: SSE Energy Solutions – Letter of Authority template

What is an LOA for business water?

A Business Water Letter of Authority is a legal document that authorises a broker you are working with to facilitate the transfer of your water and/or wastewater supplies to a new business water supplier.

An LOA is also utilised when your broker assists in negotiating a renewal or securing lower rates with your current water supplier.

Business water LOA permissions

A business water LOA gives your broker the permissions needed to switch business water supplier, which include:

Access industry-held data, including consumptions, contract end dates, and metering information.
Issue termination notices should the need arise and opt out of future contract renewals on your behalf.
Request, receive and negotiate quotes from business water suppliers.
Contact your current supplier to resolve any issues and authorise any required adjustments, refunds, or amendments to business water bills.
Handle any objections as a result of the switching process with current suppliers.

What to look out for with a business water LOA?

In the business water industry, the format of letters of authority (LOAs) used by brokers is tightly regulated by Ofwat, the regulator. However, it is advisable to review these two key points when you receive your business water LOA:

How your broker gets paid: The LOA should include a sentence explaining how the broker is compensated for their services. It will either state that the broker will bill you separately or that their fee is incorporated into your new business water rates.
Length of time the LOA is valid: The permissions granted to your business water broker must be time-limited, and the duration of validity should be specified in the LOA. It is important to review how long you are granting permission and ensure that you are comfortable with this term.

Business water LOA template

The following template shows the standard form of a letter of authority that is used by third-party intermediaries (brokers) in the water industry.

Please note that different business water brokers typically use slightly different forms of this LOA, and you should always read it carefully before signing.

Standard business water LOA template:

[Your company details]

Further to the agreement entered into between us, I/we understand that you, [name of business water broker] need written confirmation from me/us, in the form of this letter, so that you can provide the services we have agreed. Therefore, for the purpose of you dealing with water supply and/or wastewater services retailers on my/our behalf, I/we confirm that you are authorised to carry out the following activities in relation my/our water supply and/or sewerage services arrangements to the extent indicated below:

Request and receive current and historical information relating to premises registered in my/our name including, without limitation – consumption history, meter numbers, contract end dates and termination fees.
Request and receive current and historic information about my/our billing, consumption, meter details, tariff and debt information held by my/our current and/or previous water supply and/or sewerage service providers.
Request, receive and negotiate quotes from providers of water supplies and/or sewerage services.
Negotiate contract terms with providers of water supplies and/or sewerage services.
Issue contract termination notice(s) in relation to my/our existing water supply arrangements and/or sewerage services arrangements.
Agree and enter into new water supply and/or sewerage services arrangements.
Agree changes to my water supply and/or sewerage services arrangements including, without limitation, adjustments to bill amounts, refunds or changes to payment methods.

I acknowledge that we have discussed and agreed your charges and how you are to be paid and therefore I understand that [the bill I receive will reflect the charges of the relevant water supply and/or sewerage services provider plus your charges]

This Letter of Authority shall remain valid until [insert date].

[Company authorised signatory]

Extracted from: Ofwat TPI Letter of Authority template

Letter of authority – FAQs

Our experts answer those frequently asked questions about the Letter of Authority used in business utilities.

How long is a Letter of Authority valid?

An LOA is typically valid for 12 months; this duration should be clearly stated on the document itself.

If you are not satisfied with the length of the LOA, you have the option to either shorten or extend it, depending on your preference. Simply ask your broker to amend before you sign the LOA.

Who can sign a Letter of Authority?

Generally, an LOA can be signed by an authorised representative of the company or organisation, such as a director, officer, or manager, who possesses the legal authority to enter into agreements on behalf of the organisation.

In some instances, the individual may be required to provide additional documentation or proof of their identity to confirm their authorisation to sign the LOA.

If you are managing a sole trader business, then the sole trader themselves will be required to sign the LOA.

What is the process after I submit a Letter of Authority?

Most brokers will send you a digital copy of the LOA for your review and signature.

Once you have signed the document, an alert will be sent back to your broker, informing them that you have completed the LOA.

Your broker will then submit this to various suppliers to obtain competitive prices and access industry-held data. Should you opt to switch suppliers, your broker will use the LOA to secure a draft contract from your chosen supplier.

Do I need an LOA to compare business utilities?

No, small businesses can typically obtain business energy quotes without the need for a signed LOA. However, if you decide to proceed with one of your quotes, you will then be asked to sign an LOA.

Compare a range of business utilities through AquaSwitch to save money and switch to a better provider.