What Is a Letter of Authority and Its Importance?

A Letter of Authority(LoA) is a legally binding document that permits a third party to communicate with a supplier on your company’s behalf. This letter is also known as an authorization letter. Before an agent can do anything, you must sign this form and get your broker’s approval.

You will need to write and sign a new authorization letter if you wish to continue delegating your company management to a third party after the first one expires, which typically lasts up to a year. Let’s dive into the specifics of an authority letter and see what it entails.

What Is a Letter of Authority?

So, what is a letter of authority? A letter of authority (LoA) is a unique and valid legal contract that permits a third person, sometimes known as an “agent,” to communicate with suppliers on your or your company’s behalf.

You should list the particular duties and obligations the third party has been given permission to handle on behalf of “the principal” in a well-written letter of authorization. Additionally, it must always be signed, state the date of the signing, and specify the length of time for which the power is being provided.

With a letter of authorization, a third party may communicate with your energy provider. A broker is an individual or company you choose to carry out this task. As a consequence, they may ask questions and carry out tasks for you like:

Deal with billing difficulties and communication with your supplier;
Address account management and energy infrastructure difficulties for your company;
Question about your energy consumption, including your invoices and debts;
Access past account data, such as energy use histories, supply statistics, price details, and contract dates;
Bring up grievances with your supplier and resolve them;
Request exclusions from the VAT or Climate Change Levy on your behalf;
Make appointments for site inspections for system maintenance, such as smart meters;
Cancel or extend your existing energy contract;
Change your energy provider and sign a new contract;
Contact other energy providers, get pricing from them, and then bargain with them.

How Can You Compose the Perfect Letter of Authority?

It’s easy to write a letter of authority. You can write it yourself, edit a format that is readily accessible on most platforms, or hire a respectable company to do it for you. You must provide permission in this document for a third party to communicate with your energy provider.

Additionally, you must permit them to control the account directly. The paperwork also requires the signature of your energy broker. The degree of authority you may provide is up to you to decide. You have the option of merely granting access to information.

You may permit access to information such as the total amount of your monthly bills, the terms of your payments, energy measurements, previous energy use, etc. This will enable your energy broker to get a cheap energy tariff by asking other energy providers for quotes.
You might also give your energy broker authority to act on your behalf if you seek more comprehensive power management. This may likewise enable them to change contracts, get in touch with other suppliers, get information, arrange equipment installation, and much more.
To prevent misunderstanding, you must ensure that the Letter of Authorization specifies every level of access you plan to provide. If not, it can permit brokers to handle your account unwantedly.

Can You Switch Suppliers with A Letter of Authority?

It might take some time to change energy providers. It may also be complex since there are many providers, many tariff kinds, and variations in energy pricing based on geography and other variables. This is why many businesses continue to use their present providers and pay inflated costs for commercial energy.

Utilizing an energy broker is the most effective approach to changing energy providers. However, energy brokers cannot communicate with providers on your behalf without your express written consent.

Energy brokers are authorized to assess several tariffs and choose the most cost-effective one for your company with the help of a letter of authorization. The broker may also manage the changeover between your current and new energy provider, guaranteeing that your supply is uninterrupted in the meantime.

What Is the Validity of a Letter of Authority?

You should always state the duration of the authority in detail in an authorization letter. However, duration of either six or twelve months is seen as typical.

An LoA will often only be regarded as effective for 12 months from the day you signed it if it does not mention a specific time frame during which the letter will stay in effect. This implies that the letter must state whether the LoA is to be considered valid for some time greater or less than 12 months.

For the third party to be allowed to continue functioning on behalf of your company after the period specified in the letter has passed or after 12 months if no particular time is specified, a new, validly signed, and dated LoA will be necessary.

Who Can Sign a Letter of Authority?

A formal Letter of Authority has the power to provide someone the power to communicate with energy providers on your or your company’s behalf. The business owner, a director, or another properly named and authorized signatory from your company must always sign and date the document.

Also, remember that each authorization letter must be physically signed with a pen before filing. Similarly, you must print the letter on business letterhead paper wherever feasible. Additionally, a document copy should be prepared and filed for future use.

Understanding Letter of Authority

A letter of authority is a formal document that permits a third party to communicate with providers on your or your company’s behalf. The letter will specify the duties the third party may carry out for the principal. Numerous UK sectors make use of letters of authority.

Now that you understand the power of an LoA, you can write one for yourself or get a company to do it for you before you delegate your duties to a broker. They are necessary for the energy market before a broker or consultant may communicate on your behalf with energy providers. Before they can take any action, it must be signed, dated, and sent to the consultant and often also to your existing energy provider.