Understanding Letters of Authority: A Quick Guide
Business owners can benefit from Letters of Authority (LOA) as a way of not having to do certain tasks themselves.
Understanding how Letters of Authority work is important, as is having a quick guide to explain the process. A quick guide will easily explain the entire process to understand.
A Letter of Authority is a legal document that permits a third party to communicate directly with energy suppliers on behalf of a person or a business. This is because many businesses are too busy to spend time comparing, choosing, and handling the best business energy deals for their company.
Third parties are usually professional energy consultants who work for business energy companies like Utility Bidder. These companies help businesses with LOA, and how to write them. They even provide templates so that businesses can add information that they want to be in the letter.
What is a Letter of Authority?
A Letter of Authority gives third-party legal permission to correspond with energy suppliers on a business’s behalf. A properly drawn-up LOA contains a list of certain tasks and responsibilities that the third party has been authorised to handle, a signature, the date it was signed and states how long the LOA is valid for. It has to be signed by an authority figure in your business, your energy broker, as well as a third party.
On average it takes about four to six weeks for UK companies to send out an LOA, depending on how fast your energy supplier can send it out. Signing an LOA does not mean that the third party can make the final decision. A third party cannot sign a contract on behalf of the business that they are the intermediary for. An LOA is usually valid for 12 months, whereafter it has to be renewed with new signatures and dates. If you decide not to renew the LOA, you have to make sure to cancel it correctly.
An LOA enables a consultant to:
● Communicate with your current energy supplier to deal with any service and/or billing queries on your behalf.
● Organise energy-related maintenance or upgrade appointments with your supplier.
● Submit meter readings, or collect energy usage data collected by your supplier for energy management purposes.
● Start the process of renewing or switching energy supplier contracts, or negotiate with other suppliers to find better deals for your business.
● Request and receive current and previous account information, including usage history, supply numbers, pricing details, and contract end dates.
● Raise complaints with your supplier, as well as handle them, on your behalf.
● Request VAT or Climate Change Levy exemptions on your behalf.
There are two types of LOA’s. Level 1 is used to access energy supplier information, like your current energy usage data, your current contract, and any required meter readings. Level 2 gives third-party access to almost all of your energy supply data. It also allows them to make decisions completely on your behalf. Most energy brokers only need a Level 1 LOA, but you should always check what level your broker needs. It is not recommended to get a Level 2 LOA. This allows you to have control of the responsibilities the third party is legally bound to, which might protect your business down the line.
How to write a Letter of Authority.
Even though some energy consultants provide LOA templates, it is important to make sure that the information within it corresponds with your business needs. It might be best if you draw up the LOA yourself. Use language that is easy to read and understand. Be accurate, and define all terminology, phrasing, and permissions clearly.
An LOA should always:
● Be typed on company letter-headed paper.
● Include the complete names, addresses, and contact details of your business, your broker, and the third party.
● Clearly state who you are delegating your authority.
● Clearly state the duration of the agreement.
● Set out the tasks and responsibilities given to the third party.
● Be signed and dated within the last 12 months.
● State which level of LOA is being given.
● Clearly state the terms of authorisation.
The LOA has to be printed out and signed manually with a pen. Photocopies of the LOA have to be made and kept on record for future needs.
Template of a Letter of Authority.
[YOUR COMPANY HEADED PAPER]
[Insert business name, registered address, and company number]
To whom it may concern,
We hereby authorise [insert third party’s name] to act as the utility management company for [insert business name]. Please accept this letter as authority for [insert third party’s name] to obtain energy supplier quotes, serve notice on current contracts, access any relevant data held by current suppliers, as well as all billing and usage information, and any other relevant account information on our behalf. We also authorise any changes to the account during the life of the currently agreed contract, if instructed and signed off by us. This includes, but is not limited to, submitting VAT forms and CCL exemption forms. This authority is granted for 12 months commencing on [insert today’s date].
[Insert third party’s name, registered address, company number, and relevant contact details].
For the complete avoidance of any doubt, this letter of authority does not permit or authorise [insert third party’s name] to enter into any new supply agreements on our behalf. To confirm, an authorised representative of [insert business name] must sign all such agreements.
[position held in business]
An LOA is a legally binding contract stating the business relationship between your company, your utility provider, and a third party. LOAs save businesses time when it comes to dealing with their service providers, and the management of their contracts.