In a study carried out by the Competition and Markets Authority (CMA) it was found that a staggering £7 billion is being wasted by small and medium-sized businesses which have been overpaying on their gas and electricity bills. And yet, this massive overspend could easily be avoided – says Nolan Braterman from Frontier Utility.
If you fail to shop around for your business energy rates before your contract end date (or before your notice period) you are automatically rolled over to your provider’s standard tariff. These rollover tariffs can be up to 40% more expensive than if you looked elsewhere or renegotiated.
Half of the SME’s who are customers of the Big Six energy firms haven’t changed provider in five years – meaning they are probably on the company’s standard tariff. This can be up to 116% more expensive than other tariffs. It’s been found that 45% of small businesses are on these, so this is definitely something to check up on.
Set a reminder
By setting a reminder a few weeks before your notice period you will avoid missing your end date. Businesses do not have the same cooling off periods that consumers have with energy, therefore it’s important to take action first. This can be done by the Procurement Manager, Office Manager etc.
Speak to a broker
By providing a broker with a copy of your most recent bill they will be able to analyse your rates and find you the best deal. You can talk to an energy broker at any time to lock in rates and look into different suppliers. Even if you don’t end up going with what they offer, speaking to a broker can give you a much better understanding of the industry and how the market currently stands.
Do your research
If you’d rather not speak to a broker, it’s easy to dig up some information from Google about suppliers, the energy market, current rates etc. Review websites like Trustpilot and Feefo can give you a good idea of the level of customer service the suppliers provide. There are also the typical comparison websites that can give you an idea of current prices – remember to search for business energy and not the consumer market. Don’t be afraid to step outside the Big Six energy companies.
Better the devil you know
There is absolutely no need to stay loyal to a particular energy supplier. Many businesses are cautious of changing provider as they struggle to see the benefits of changing over and feel that switching is a difficult process. As long as you take the above points into consideration, switching provider is generally hassle-free.If you are able to find competitive rates elsewhere, there’s no harm in contacting your current provider to see if they can match it. When doing this, avoid making any verbal contractual agreements over the phone unless you’re 100% ready as this will lock you in and prevent you finding a better deal.
Most people will be familiar with the Big Six energy firms and would have seen the recent coverage about them raising their prices, particularly British Gas. However, it is, in fact, all energy suppliers who will be or have already raised the bar, even Utility Warehouse who are generally known for being cheaper.
With this in mind, it’s likely that you will not find a rate that’s as low as the tariff you’re currently on, therefore the most crucial thing is finding something better than your rollover rate, which is the most cost effective over time – not right now. If you do feel you’ve found a particularly good rate or a broker has highlighted this for you, it is sometimes possible to lock in this price for one or even two years – meaning you can enjoy today’s prices later on down the line.
In an ideal world, you’d think that once you have signed a new contract it will be plain sailing from then on. Nevertheless, there’s no harm in being overly cautious. It’s recommended that regular audits should be put in place to check for inaccuracies on your bills, these errors often derive from incorrect meter readings and rate charges. Only 20% of UK businesses currently check their gas and electricity bills on a regular basis, although with one in five businesses’ energy bill containing errors, it’s easy to see how big mistakes slip the net.
Overpaying for your business energy will only ever be avoided by switching energy provider or renegotiating your contract. This will only ever be made difficult if your contract has rolled over or your switching window has passed. The savings that you see will certainly make the small amount of effort required to switch, worthwhile.