What is a Letter of Authority?

What is a Letter of Authority, and what will your business need it for?

An affordable and reliable energy supply is crucial to the operations of your business, but many business owners don’t have time to handle either the energy comparison or the administration of their account. That’s why many yield the handling of their energy contracts to an energy consultancy or broker. These intermediaries can help businesses compare and switch energy and handle negotiations with suppliers.

But before these consultants can step in, your business will need to provide them with a Letter of Authority (LoA). A Letter of Authority is a legal document that gives these third-party intermediaries the right to correspond with energy suppliers on your behalf.

What is a Letter of Authority?

A Letter of Authority is a legal document that authorises a third party – often known as the ‘agent’ – to correspond with services on behalf of your or your business – known as the ‘principal’. The letter will specify the tasks the third party can handle for the principal. Letters of Authority are used in many UK industries.

In the energy market, they’re required before a broker or consultant can correspond with energy suppliers on your behalf. It will need to be signed and dated and submitted to the consultancy and generally also to your current energy supplier before they can act.

Letters of Authority will state how long they’re valid for. 12 months is standard. You’ll have to sign another one after that time to authorise your broker to continue acting for your business.

What does a Letter of Authority enable a consultant to do?

In the energy market, a Letter of Authority may grant a consultant the right to:

• gather data on your business location and meter portfolio
• liaise with your current supplier and handle billing issues
• handle administrative issues related to your energy supply and the management of your account with your supplier
• request and receive all billing information, including copies of energy bills, debt information, and payment terms
• request and receive current and historical account information including consumption history, supply numbers, pricing details, and contract end dates
• raise complaints with your supplier and handle them
• obtain information from third party industry databases, for example, metering details
• submit VAT forms, CCL (Climate Change Levy) exemption forms
• request meter exchanges and new installations, including smart meter installations
• handle Change of Tenancy
• arrange site visit appointments
• renew your energy contract or terminate it or opt out of future automatic renewals
• switch your energy contract
• request prices from and negotiate with energy suppliers
• find you the cheapest gas and electricity deals

Typically, Letters of Authority won’t give these consultants the right to sign onto a contract without your consent. The only energy contracts you enter will be ones you specifically and personally have agreed to.

But each consultant will have its own letter of authority and you should read them carefully before signing, to ensure you’re not handing over too much power to these third parties.

What are some examples of Letters of Authority?

Letters of Authority will often include language like below:

• “I, the account holder, do hereby give authority for the above named person to discuss all aspects of my [supplier] Energy account with [the supplier] on my behalf. This includes (but is not limited to) my bills and usage, payments and any other account activity past or present.”
• “For the avoidance of doubt, this letter does not authorise [broker] to enter into new supply agreements on our behalf.”
• “I/We hereby authorise [consultant] to act as the utility management company for [business name] with enquiries regarding ANY relevant data to enable us to do this. We authorise them to terminate contracts on our behalf. We also authorize them to deal with any changes to the portfolio during the life of any contract.