Comparing energy suppliers online can quickly become time-consuming, especially if your business is bogged down with clients. Energy comparison services and business energy suppliers can handle this energy switch for you through the use of a letter of authority, or LOA for short.

But what exactly is a letter of authority and why is it needed for switching energy suppliers? Below you will find out exactly what an LOA is, and why it is needed to switch your current suppliers!

What is an LOA?

A letter of authority, LOA for short, is a document used to declare that a third party can act on the behalf of an energy supplier, within limited terms. For energy management purposes, this essentially means that a third party has been trusted by your supplier to handle your energy contracts.

The most common use of an LOA within the electricity industry is when you want to invest in the services of an energy broker. By providing your energy broker with a letter of authority, you are declaring that they can handle your energy bills and contracts for you.

This is most commonly used for switching suppliers or comparing pricing details. Finding a new supplier that works for you can be extremely time consuming, which is why it is a great idea to assign someone to compare energy deals for you.

Why are LOAs used to switch business energy suppliers?

Switching your current energy supplier can be difficult for many business owners, which is where business energy brokers come in. An LOA will give your broker the means to act on your behalf and will declare exactly what they can and cannot do for you.

A letter of authority can be used to request historical account information from your current energy supplier which may be needed to switch supplier. Most new supply agreements that involve energy consultants will require an LOA.

There are two different types of LOA, these are:

  • Level 1: This is usually used to access energy supplier information such as your current energy consumption data, your current contract and any meter readings that are required.
  • Level 2: This will give third party access to almost all your energy supply data. It also allows them to ask wholly on your behalf.

Most energy brokers will only require a level 1 LOA as this is what's usually needed to switch suppliers and compare a range of business electricity deals. Always check what level your business energy broker needs and whether or not you trust a third party enough to supply them with a level 2 LOA.

How do you read and understand a Letter of Authority?

As complicated as they might sound, most LOA's are fairly easy to read and understand. Most information should be clearly expressed and all parties information can usually be found quickly in case of any issues in the future.

Before you sign a business energy LOA, you should always make sure you read it carefully so that you fully understand everything outlined in the letter. Read through the letter line by line to ensure that you are happy with everything included before final approval.

How do I write an LOA?

Writing an LOA may seem like a difficult task at first but it doesn't need to be. Be sure to follow the following guide so you can write a professional and official LOA:

  • Always include the full business name, a complete address and the contact details for both your business and the third party you are writing the LOA for.
  • Where possible, try to always include an official company letterhead to show that it is an official document.
  • Make sure you clearly outline what your LOA will allow a third party to do on your behalf. This should cover the relationship between you and the third party, how long the LOA will last and the level of the LOA you are providing.
  • You may also be able to find a template letter that you can use by contacting your energy supplier. Just make sure you double-check what is already included and omit anything that you don't require.
  • Copy your letter multiple times so you have a backup LOA in case of any issues further down the road. It's always a good idea to have a spare letter for future reference

The most important tip to keep in mind is that you should always make sure the information included in the LOA is clear and concise. As an LOA can be used legally, it is important that you define all permissions clearly!

Frequently Asked Questions

The turn-around time of receiving your energy suppliers LOA depends entirely on how fast they can send it out. The typical length of time for many UK industries to send out an LOA is anywhere between 4 and 6 weeks.

If you don't receive your LOA before then, then we recommend you get in touch with your energy supplier. The letter itself may be delayed for a host of different reasons such as a lack of clarity. It's best to be vigilant when legally binding documents are involved.

This depends on which level the current letter of authority falls under. There are two main levels of LOA, which are simply known as Level 1 and Level 2. A level 1 letter will give a third party access to your consumption history and current contract details.

A level 2 will allow a third party to act completely on your behalf, such as signing a new deal with new suppliers. It will also a third party, such as a broker or consultant, to obtain information from your current suppliers that a level 1 LOA may not cover.

Most letters of authority are valid for up to 12 months from the date they were written. Usually, the author of the letter will define exactly how long the letter is valid, so always double-check the length of any LOA you write or receive.

If you are writing the LOA for an energy broker then be sure to highlight exactly the duration of the letter.

Before you sign any legal document, you should always do a cost to benefit analysis to see if it is worth your time signing the document. It is also highly recommended that you seek the services of a lawyer to validate any information contained with the LOA or any legal document.

A lawyer will be able to give you advice and may even find things contained with the document that could be great or could be detrimental. It is a good habit to always seek the help of a lawyer before you sign any legal documents.

Once the letter of authority has expired, you should always ensure that you cancel it correctly. The best way to do this is to issue a new letter for the addressee of the original LOA declaring that the original letter of authority is now cancelled.

In terms of business electricity, a utility management company will have their own termination policy. So be sure you double-check the energy supplier contracts to check for contract end dates. You may be able to cancel a letter of authority if both you and the energy supplier agree.