What Are Drop Notifications?
When a customer that is under agreement with a retail energy supplier decides to switch their account back to the utility for default supply, or to another supplier, the existing supplier receives a drop notification from the utility company. Drop notifications are alerts that the customer has decided to switch their supplier of record. Since local utility companies handle switching between suppliers, all providers are notified when a customer decides to leave.
Drops When a Customer Is Out of Contract
If a customer has satisfied the term of a fixed-rate contract or is on a month-to-month agreement with a supplier, the drop notification is a common occurrence. This drop could trigger when the customer decides to enter into an agreement with a new supplier or return to the utility default price to compare. Either way, the existing supplier gets a notification when the customer’s account(s) are dropping or switching.
Drops When a Customer Is Under Contract
If the customer is still under contract with their supplier, the drop notification could be problematic. Many suppliers enforce early termination fees and penalties for customers that leave their fixed agreements early. These fees are usually equal to the sum of the total energy remaining on the fixed contract. See more here regarding early termination fees. There are many reasons why a customer’s account(s) might drop mid-contract:
The Customer Was Slammed
Unfortunately, not every retail supplier plays by the rules. Some suppliers are notorious for enrolling customers without their express permission. There were many cases in the past of suppliers cold calling customers and tricking them into agreeing to enter into a supply engagement. Sometimes the salespeople would pose as the local utility, have the customer confirm account numbers, and switch the customer without their consent. Fortunately, many regulatory bodies have been cracking down on the underhanded methods and have dished out millions of dollars worth of penalties to unscrupulous suppliers.
The Customer Changed Account Numbers
If and when a customer’s utility account numbers change, this triggers a drop notification from the utility. Since the original account number is under agreement for energy supply, when it no longer exists, the supplier receives a drop notice. There are several reasons why a customer’s utility account might change:
- The utility issues a new account number
- The customer changes its legal entity name on the utility bill
- The customer’s meter is upgraded
- The customer’s service address is changed
- The account number becomes inactive due to a business closure
In these cases, it is usually quite simple to get the customer re-enrolled on their existing supply agreement providing the broker takes action immediately. See more on how to manage utility drops here.
The Customer Actively Decides to Switch
If the customer decides to switch to a new supplier mid-contract, then the existing supplier will receive a drop notice that the customer is switching. Sometimes utility companies will even provide the reason for the switch to the supplier. In these scenarios, the customer takes on the risk of having to pay an early termination penalty. These early penalties can be quite large depending on the size of the business, current market prices, and the price of the canceled contract. Good energy brokers never advise their customers to leave a contract early.