Shell Energy - New Fixed Tariff with pending sale of business

FrankMT

I'm a Shell customer and was offered the new Shell Energy July 2024 v11 fixed rate today... But I've also just seen that Shell are due to sell their business to another supplier soon.
I've read that any new supplier should honour the terms of the existing deal at the point of transfer for the remainder of the contract term... But, what if I don't like the new supplier for whatever reason?  Would I be able to end the contract without exit fees (exit fees are £75 per fuel, so £150 for dual fuel)?
Anyone have any idea?

spot1034

Given the time it has taken to transfer the customers of other big suppliers whose businesses have been been taken over, you would probably find it will take months from the time of any announcement (which might itself be months away) so your year might be up before very much happens.

Ectophile

No, you wouldn't be able to cancel the contract early because you don't like the company that has taken over the business.

[Deleted User]

If a new supplier is paying £Ms to takeover an energy business then a chunk of that money will be paid for what is known as ‘goodwill’. Goodwill is a payment for the millions of customers that the new supplier takes on without having to pay for such things as referral fees. The new supplier will also take over the wholesale energy contracts. If it then offered free exits to all ex-Shell customers then it might find that has bought something with a lot of financial commitments but with a rapidly reducing customer base. For this reason, you will be transferred across on your existing contract terms.

FrankMT

Ectophile said:

No, you wouldn't be able to cancel the contract early because you don't like the company that has taken over the business.

So, after much digging, I found this in the terms of the contract:

23.2 You cannot transfer any of your rights or obligations under your contract to another person without our prior written permission.

23.3 We can assign, grant security or declare a trust over, or transfer by novation or otherwise, all or any of our rights (including the right to recover unpaid charges) or interests and liabilities under your contract and/or sub-contract any of our obligations under your contract, in each case without your prior consent.

So you appear to be right. However, gov.uk has this regarding "Unfair Contracts":

You can’t enforce unfair terms in a consumer contract...
Your contract terms might... be unfair if they weigh the contract significantly in your favour, eg:

- by providing for excessive cancellation charges and automatic loss of all upfront payments

- by creating unbalanced rights, eg being able to cancel a contract at any time, but requiring the customer to give 3 months’ notice

It just looks unfair to me. My contract is with Shell. If I want to exit the contract because the other party has changed a fundamental term of the contract, why should I have to pay an exit fee?

It's a moot point, as I have taken the fixed rate anyway, and I'm unlikely to object to any new supplier chosen... but it's the principle of it that irks.

[Deleted User]

FrankMT said:

Ectophile said:

No, you wouldn't be able to cancel the contract early because you don't like the company that has taken over the business.

So, after much digging, I found this in the terms of the contract:

23.2 You cannot transfer any of your rights or obligations under your contract to another person without our prior written permission.

23.3 We can assign, grant security or declare a trust over, or transfer by novation or otherwise, all or any of our rights (including the right to recover unpaid charges) or interests and liabilities under your contract and/or sub-contract any of our obligations under your contract, in each case without your prior consent.

So you appear to be right. However, gov.uk has this regarding "Unfair Contracts":

You can’t enforce unfair terms in a consumer contract...
Your contract terms might... be unfair if they weigh the contract significantly in your favour, eg:

- by providing for excessive cancellation charges and automatic loss of all upfront payments

- by creating unbalanced rights, eg being able to cancel a contract at any time, but requiring the customer to give 3 months’ notice

It just looks unfair to me. My contract is with Shell. If I want to exit the contract because the other party has changed a fundamental term of the contract, why should I have to pay an exit fee?

It's a moot point, as I have taken the fixed rate anyway, and I'm unlikely to object to any new supplier chosen... but it's the principle of it that irks.

How so? Your contract remains as it was (same prices; duration and exit fees) but your energy is supplied by a new supplier. If your view prevailed, then BG would not have set up BG Evolve; E.oN would not have set up E.oN; Ovo would not have bought SSE etc.  Sales and mergers are a normal part of doing business. Unless the new supplier changes the basic terms of your contract, then you do not have a case to switch without paying exit fees (if they apply). 

As far as any sale goes, para23.2 applies. All energy suppliers have a similar provision in their domestic supply contracts.

FrankMT

"How so?" Because the parties to the contract form an important part of the contract. Money isn't everything. As I say, this is all hypothetical, but what if I had an objection to the new supplier on ethical grounds? I entered into a contract with Supplier A, but Supplier B is, say, complicit in human rights violations (for example)? What if I entered a fixed term contract with Supplier A because they invest in "green" energy, but Supplier B doesn't (for example)?

Yes, companies should be allowed to sell their business, but customers should not be forced to do business with a company they have not chosen themselves. Surely?

Changing the supplier is (in my view) a fundamental change to the contract, and it should be up to the other party (in this case the customer) to agree or exit the contract without penalty. Otherwise it's "unbalanced rights", no?

CSI_Yorkshire

You're not forced to do business with any supplier for any longer than the time taken to switch.  It's the same for a supplier merger/takeover as it is for a supplier failure or for you moving house.

It might look unfair to you, but as far as I know you don't define contract law just by feeling hard done by.

What would you prefer?  On any of the situations I mentioned above, your contracts are automatically cancelled and you no longer have a right to use energy until you sign another?

If your new supplier can't just cancel the fixed contract that you are on (which could be cheaper than any other contract they offer, so they would like to), then neither can you.

Alnat1

If it might be a problem to you, why don't you switch the account now to a company you would want to be with (that also has a decent fix?) so you don't end up with a company you don't want to be with.

[Deleted User]

"How so?" Because the parties to the contract form an important part of the contract.

I return to my earlier point. Company B pays £50M in goodwill to takeover 1M customers from Company A. 500K of Customer A’s new customers have a problem with Company B’s ethos and expect to be able to leave without paying exit fees. If this was to happen, then it would stop company mergers and acquisitions in their tracks. The simple truth is that if the new company is prepared to honour your original contract terms you have not been financially disadvantaged by the sale of Shell Energy to A N Other. 

luvchocolate

Alnat1 said:

If it might be a problem to you, why don't you switch the account now to a company you would want to be with (that also has a decent fix?) so you don't end up with a company you don't want to be with.

This is exactly what I've done...switched from Shell to Octopus last month