Five tips for paying as little as possible for business energy

As a business, it's even easier to overpay for gas and electricity than it is for a domestic energy customer. Jonathan Elliott explains how to make sure inflated bills don't arrive in the post.

Twenty pound notes

Take note: Business energy is an unavoidable cost, but you need to make sure you're not paying more than you need to

Keeping costs to a minimum is crucial to the success of any business, but you have little or no control over some overheads - business rates and vehicle fuel being prime examples. In a sense, energy bills fall into that category, because we can do very little about the fact that prices seem to keep going up with alarming regularity.

However, you need to be aware that you are not totally powerless to affect this cost, in the sense that you can take measures to ensure you are paying the minimum amount possible.

Failure to do this can often mean paying 30 per cent more than necessary, which - depending on the nature of your business and the amount of energy you use - could amount to thousands of pounds eating away at your annual profit figure.

1. Know how much you should be paying - 10p is too much

To identify whether you should be paying less right now, you first need to dig out a recent bill or contact your supplier and find out your unit rate. The current rule of thumb is this: 10p per kWh is too much for electricity; 4p per kWh is too much for gas. A higher unit charge also tends to go hand in hand with a higher daily standing charge.

Energy suppliers will not be proactive about prompting you into action because the last thing they want to do is let you know you're free to shop around

2. Understand your business energy contracts - are you a rollover victim?

Commercial contracts are fundamentally different to standard domestic arrangements firstly because there is no such thing as a 'dual fuel' tariff in the business energy world, so gas and electricity are always separate. Crucially, too, they are almost always fixed for a period of one, two, or three years.

This means you generally have two contracts that come to an end on a fairly frequent basis. When that happens, business customers roll over on to the supplier's standard rate unless they take proactive action. This is the reason why many businesses are overpaying by that 30 per cent mentioned above.

3. Know when your renewal window opens - don't suffer from rollover again

It's easy to fall into the "rollover" trap because knowing your contract end date (CED) is one thing, but knowing when your 'renewal window' opens is another. This varies from supplier to supplier (ie it's not a standard four weeks leading up to your CED, for example) - and it's your only opportunity to negotiate a new contract, whether that's with the same supplier or a new one.

4. Suppliers love your inertia - the onus is on you (not the supplier)

Energy suppliers will not be proactive about prompting you into action. CEDs are not published on all your bills and you'll generally only get one letter that informs you that your renewal window is set to open. The reason for this half-hearted approach is that the supplier is happy for you to roll over onto a standard rate - the last thing they want to do is lose your custom by being overly assertive about the fact that you're free to shop around.

We've been lobbying the industry regulator Ofgem for some time to put pressure on suppliers to make CEDs more visible. Measures are slowly creeping in, but until there's full compliance you'll have to be fully engaged to know when to act.

5. Switching services support your engagement - there is help out there...

Using a switching service for your energy supply can be extremely beneficial because, unlike the supplier itself, a switching service actually wants you to take action at the right time. This means they will do everything possible to make sure you do not roll over onto inflated rates. The solution may be to set up a new fixed-term contract with your existing supplier but, because a third party (unlike the supplier) is totally impartial, it could also mean switching. During your renewal window you are completely free to shop around, and there is absolutely no chance your gas or electricity supply will be interrupted due to a change of supplier.

There are six major suppliers - and at least six smaller ones - competing for your business, so recruiting a service that offers knowledge of the whole market almost inevitably leads to an energy deal you're happy about.

Image credit: HowardLake

Make It Cheaper offers a free, impartial service that helps businesses save money on gas and electricity and a range of other overheads such as telecoms, mobile and chip & pin. Speak to a saving expert today on 0800 970 0077.

1 Comment


1 12/08/2013 09:49:26Jade Thomas said...

Great tips, thanks for sharing!

Add your Comment

See Also

Make It Cheaper's website uses cookies to provide a better customer experience. Find out more.

Make It Cheaper Ltd. Registered in England & Wales Registered No: 05949018
Registered company address: Aston House, Cornwall Avenue London N3 1LF

Make It Cheaper Financial Services Limited. Registered in England & Wales Registered No: 07548195
Registered company address: Aston House, Cornwall Avenue London N3 1LF
Make It Cheaper Financial Services Limited is authorised and regulated by the Financial Conduct Authority

© Make It Cheaper Limited 2014

Merry Christmas & Happy New Year from Make It Cheaper

Please see our Christmas opening hours listed below:
Open 23rd December: 9am - 5.30pm
Lines closed from Christmas Eve to New Year’s Day
Reopen 2nd January: 9am - 5.30pm