Why are businesses never part of the story when energy prices go up?

posted on 07/10/2013 15:48:12 by Jonathan Elliott

The energy price season is upon us and it's a familiar story - but why are Britain's small businesses never painted as victims?

In the news: Energy price rises prompt familiar stories in the press - and businesses are rarely involved.

SSE is in the headlines today for raising prices by 8.2%, meaning that the average annual energy bill for people on their variable tariff will increase by £105 to £1,379.

This is essentially the start of price rise season, because all the other five major energy suppliers will almost certainly follow suit and make the most of the revenue boost that comes with nose-diving temperatures and increased power consumption.

Media frenzy

And even though this was all entirely predictable, you can put your mortgage on a media frenzy because rising energy prices make us all so angry. As seasonal stories go, this one's as familiar as the one about the baby in the manger.

Based on what's happened in the past, here's my checklist of newspaper coverage and television spots to look out for over the coming days and weeks:

  1. Angry homeowners complaining about bills that decimate their monthly budget because utility companies "do what they like, don't they?"
  2. Outraged heads of consumer groups bemoaning a culture of corporate greed in which customers suffer in order to line the ever-deepening pockets of merciless shareholders.
  3. Embattled heads of energy companies insisting they had "no choice" but to increase prices because of uncontrollable external forces.
  4. Opportunistic politicians calling for closer market regulation, more transparency from suppliers and, this year in particular, the need for an enforced price freeze.
  5. Countless column inches dedicated to stories and opinion pieces about Britain's fuel poverty, featuring cash-strapped families, hard-up pensioners, cold and lonely winters and cancelled Christmases.

Missing

Let me be clear: it's not my intention to trivialise bad news. It's right that energy prices are in the news and there's no denying that the fact they're rising will affect many people's lives profoundly.

I just have one simple frustration, which is that there is always one group of important stakeholders missing from the narrative: Britain's small and medium-sized businesses (SMEs).

One good thing that comes from headlines about price rises is that more people engage with a market where it is possible to get a better deal if you proactively seek it out. Businesses, meanwhile, do not receive this annual trigger.

Just like homeowners, many businesses pay energy bills every month and those bills only go up. Just like homeowners, many businesses are struggling to pay those bills and keep their heads above water. And just like homeowners, many businesses are paying more than necessary because they have no particular desire to engage with suppliers they don't particularly trust.

Tough times

It's extremely tough out there for small businesses - and rising energy bills are just one of many factors that make it that way. Since SMEs provide around 60 per cent of private sector employment in the UK and produce around half of private sector revenue, this is something that everyone - not just business owners - should be motivated to care about.

So, why are they excluded from the story?

Well, the main reason is that businesses are always on fixed-term contracts - and the price rises that major suppliers announce only immediately affect people on their standard variable rates. This translates to the vast majority of their domestic energy customers.

Unfortunately for businesses, from a PR point of view there's no equivalent announcement of a price rise that affects them and no day on which it actually takes place. This doesn't mean that prices are not going up for businesses -they definitely are- but the way in which that happens makes a less accessible and dramatic story for journalists to tell.

Silver lining

This is a shame because one good thing that comes from the price rise headlines is that more people engage with a market where it is possible to get a better deal if you proactively seek it out. Those people, if they act quickly, can find themselves on a tariff that fixes their prices for a couple of years at a lower amount than the new variable rate their supplier has just announced.

Businesses, meanwhile, do not receive this annual trigger. They are not prompted to act because, like all of us, they're watching, reading or listening to what's essentially a consumer story.

This is all the more irritating because businesses arguably have so much more to gain than homeowners by reviewing their energy bills. Their consumption may well be higher than that of a typical homeowner, so the higher price they're paying for their unit rate has a more dramatic impact on their finances.

Severity

And even more significantly, businesses that take their eye off the ball can easily end up paying around 30% more than they need to - whereas the punitive rates in the domestic market are nowhere near as severe.

The sheer number of affected parties means it's inevitable that the main focus is on home energy consumers when prices go up - but if business owners were even playing a supporting role in the media's eyes, how many more would engage with the market, reduce their costs and improve their prospects of future survival and growth?

Never mind the upcoming school nativity play - if ever there was a plot that needed thickening, it's this one.

Image credit: Jon S

Jonathan Elliott

Jonathan Elliott is Make It Cheaper's CEO and founder. He recognises that small businesses are the lifeblood of the British economy, and is passionate about making it easy for them to save time and money, boost their profits and improve prospects for growth. As a vocal campaigner for fair treatment of SMEs by utility companies, Jonathan collected ‘SME Consumer Champion’ & ‘Most Trusted’ at the 2013 Energy Live Consultancy Awards.

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