Cheap Electricity - Key Questions

Business electricity regulator - Ofgem - suggests '9 Key Questions' you should ask when comparing cheap business electricity. Here they are, along with a cheap electricity expert's interpretation:

1. What is the charge per unit? Are there any fixed or standing charges? For electricity, are there any capacity charges per KVA?

The unit charge - measured in kWh - can differ fourfold from one business to the next and is the most important variable when comparing cheap electricity prices.

Standing charges are applied to most business energy contracts and, confusingly, are given in either 'per day', 'per month' or 'per quarter'. Try and calculate it on a per day basis - so that you can compare the cheapest electricity prices like for like - and aim for around 15p/day for electricity and 9p/day for business gas.

Capacity charges are additional charges that only apply to high consumers (those with a supply number that starts with 05, 06, 07 or 08). KVA is a unit of power required to run industrial machinery and the worst case scenario if you are small, but intensive, energy user would be an extra £2,000 per year to your business electricity bill.

2. Can the price I pay for energy change during the life of the contract? If so, how will you tell me about this or any other changes to the contract? Are charges fixed or variable? If they are fixed, how long for? If they are variable, which parts may vary?

This question is to warn you that some suppliers may encourage you to accept a variable, rather than a fixed, rate. However variable rates can be pretty unpredictable and you will have no control over amounts you are charged in future. For the cheapest electricity, always go for a fixed price, fixed term contract.

3. What happens at the end of my contract or the fixed-term period if I stay with you as my supplier? What can happen at the end of my contract or the fixed-term period if I do not renew my contract? What do I need to do if I do not wish to renew my contract?

Stay and your commercial electricity contract will be automatically renewed on a new rate - usually higher - and you'll be stuck in that contract for another year or more. Decide to leave and you will have to give sufficient notice which can be as much as 120 days before your contract end date - you can calculate your notice period with our Window Checker. If you serve notice but do not switch to a supplier offering cheap business electricity, you will be put on to the punitive out-of-contract rates mentioned earlier.

4. What is the duration of this contract? Will you remind me of the contract end date? What do I have to do if I want to end the contract early?

Business electricity contracts can be anywhere between one and five years and suppliers make it very difficult/expensive - some impossible - for you to break the contract early. As it comes to a natural end, they are obliged to write to you with a renewal offer. A good broker, however, will have your renewal dates already logged in their diary as a reminder for them to get back in touch with a cheap electricity quotation.

5. How and when do I contact my supplier if I want to switch energy supplier? In what circumstances can you stop me switching to another energy supplier?

This is the reason why our Switching Tools not only calculate the dates that renewal windows open and close but also offer template letters with which to serve notice to your business electricity providers. The main reasons why switches fail are because the customer is either still in contract or has an outstanding debt with their original supplier.

6. Who can I contact to find out more information about my contract, and what information will they need from me to look up these details?

Whether you are contacting a supplier or a broker for this information, the one thing you'll always be asked for is your supply number (10 digit 'MPR' for business gas or a 21 digit 'MPAN' for business electricity). This can unlock information about your consumption, your supply area and what kind of electricity/gas user you are. Because most people don't want to grow old listening to call centre hold music, Make It Cheaper has a free service which contacts suppliers and brokers on your behalf to find out the current status of your business energy contracts.

7. Under what circumstances can my energy supply be cut off? What notification would I receive and what procedures must be followed?

This question is designed to remind the customer what might happen if they don't pay their bills! Make It Cheaper's advice is to keep on top of payments by direct debit as a company's credit score can be downgraded as a result of non-payment and - believe it or not - prices for cheap electricity and gas can be directly linked to your credit score.

8. What options are available regarding payment terms?

See above.

9. Am I committed to a minimum or maximum volume? If so what charges can be incurred in relation to this?

This question is only relevant to large commercial gas contracts where the supplier can insist on a 'minimum take' clause which means you may be charged a penalty for use significantly less - or more - than initially agreed.

For those in any doubt about any of these issues, call us free on 0800 970 0077 and one of our independent experts will be happy to guide you through the process of how to find the cheapest business electricity prices and stay in control of your contracts.