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Business gas prices are falling, but is this the good news it should be for Britain’s smaller firms?

New figures released by the Department for Energy and Climate Change show that business gas prices have fallen by an average of 6.6% in the past year. Surely this can only be great news?

The Department for Energy and Climate Change (DECC) released its latest quarterly update last week, revealing that business gas prices have fallen by an average of 6.6% in the past twelve months.

Great news, but the headline number doesn’t tell the whole story. Despite the overall drop, Britain’s smaller businesses have actually paid more for their gas in the last year.

Blurring the lines

The issue is that the figures are skewed because bigger companies have seen their prices fall. You only need a quick look at the numbers to realise this.

Small and very small business gas consumers have been hit by price increases ranging from 6% to 10%

DECC’s stats shows that gas consumers classified as medium, large and very large businesses have enjoyed price drops of between 4% and 18% - but small and very small business gas consumers have been hit by increases ranging from 6% to 10%.

When the figures are combined, the overall conclusion is that average prices are falling – but such a statement doesn’t accurately reflect the experience of the nation’s smaller businesses, who continue to get a raw deal.

Double trouble

And it’s not just gas prices – small firms are also seeing the biggest increases in the cost of electricity.

The numbers show that the country’s smallest business electricity consumers have suffered price increases of 1.4 pence per kWh in the past year - a jump that’s more than double the amount any of their bigger counterparts have seen.

Tackling the problem

It’s a tough pill for small firms to swallow – but what’s the answer?

One possible measure could be for industry regulator Ofgem to place greater emphasis on ensuring small businesses are aware of the options available and promoting the savings that can be made through switching or proactively renewing energy contracts.

Firms that have never taken the time to switch could instantly cut their prices by 30% simply by engaging with the market and securing a competitive contract, while those who are on variable rates can quickly sign up to a more cost-effective deal. The challenge lies in ensuring this message reaches the audience it needs to. 

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