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The Ultimate Guide to Finding Cheap Business Electricity
Whether it’s monthly, quarterly or annually there will come a point where your businesses electricity costs seem to be always heading north. Showing your spiralling costs on a graph looks like one long hockey stick.
There are ways though of understanding the business electricity market, and then using this find the very best prices available for your size of business. With the advent of the internet finding cheap business electricity has never been easier – and in this guide we will show you how
Many business owners or facility departments only look at contracts at the point of spend review, or when trying to reduce your electricity bill. The contracts are pulled out to check renewal dates and sometimes even who the provider is!
Energy such as electricity and gas are one of the biggest annual spends a business incurs. As such contracts should be very much at the forethought. Understanding your rates, clauses, non-price increase guarantees and importantly your contractual renewal dates, all are fundamental.
Thousands of businesses roll straight from a contract to standard pricing without even knowing. This is a such a missed opportunity. Just like any utility bill it’s prudent to shop around and seek out the best price – just like you would with your own personal insurance, mobile phone contract and utility rates.
Each month you should review your spend in line with contract and terms to make sure everything is working as it should. This allows you to monitor your activity, look for opportunities to reduce consumption but also forecast in to the future months until renewal date.
The number of businesses not aware when their electricity contracts are due for renewal are staggering. Even Ofgem have seen the results of this and for Micro Businesses (see below) they have made changes to prevent electricity suppliers from auto-enrolling to a new contract for more than one year.
This doesn’t apply to large businesses though. If your business falls in to this category it is essential you monitor your contract length, terms and notice periods yourself.
You need to understand your notice period agreement and start shopping around for new quotes and terms from your existing provider plus others to compare. It’s always difficult and confusing comparing ‘like-for-like’ with electricity and energy contracts and terms. No two providers seem to highlight and compare against the same things.
Some fundamentals, such as contract length; non-price rise guarantees during contract and kwh spend are key metrics you should be able to compare between electricity providers.
Don’t be afraid to negotiate prices, terms and even contract length, especially with your current provider. If you have been paying all bills on time and are generating a healthy revenue for them, they will want to keep you!
Use this to your advantage!
What is a Micro Business and how this affects your contract and electricity prices
A micro business is a business that meets one of the following criteria:
- Employs fewer than 10 employees and has an annual turnover (or balance sheet) no greater than €2million (roughly around £1.7m);
- Uses no more than 100,000 kWh of electricity per year;
- Uses no more than 293,000 kWh of gas per year;
There are around 1.6million businesses in the UK alone that would fall under this category and be considered a micro business.
So, what does this mean?
Well to begin with some basic legislation and awareness drivers are mandatory, such as the end date of your contract and the notice period needed to change are added to every bill you are sent by your electricity provider.
This may not seem much, but that lack of awareness has seen many small businesses pay higher per month charges than needed because switching to new tariffs and contracts was possible.
Also, the notice period for micro business can no longer, from 30th April 2015, be more than 30 days. This is really good news for small businesses because prior to this SMEs could face notice periods of up to 90 days!
Knowing as a business you’re overpaying for your electricity, and unable to pull out of your contract or do anything about it for 3 months, just added unnecessary cost and frustration. Especially to a business in the midst of growth.
Another fundamental difference for micro businesses is that now electricity providers can not automatic renew your contract for any more than 1 year.
If you fail to tell your provider of your intent to switch or move contracts, they can automatically renew your contract for a further 12 months, but after that your agreement and consent is given.
Again a preventative measure from businesses unaware of contract renewal dates and continuing to pay over and above rates for their electricity.
Can I switch suppliers
The general answer is Yes, as long as you are at the end of your contract, or no longer in a contract. There may be a couple of exceptions to this rule though – for example you may have outstanding debt with your current provider which may need to be settled first.
This though is pretty much common sense.
You also need to give the correct notice period. For larger businesses this can be 3 months, but for smaller micro businesses this will never be more than 30 days under the new 2015 legislation mentioned earlier in this article.
If you notify your electricity provider you would like to switch providers or contract, and they object, they must notify you of this in writing and what specifically they object to. This enables you to counter or resolve any objections they may have. Although this tends to be very rare.
Switching providers should be a relatively painless process. Just like a domestic switch, the providers should take care of the details behind the scenes and all should be finalised within a two to three week window.
After such time you simply move forward paying your new provider, as well as settling any outstanding monies with your previous providers to completely close down your account.
Comparing the business electricity market
Just like comparing the prices for your own personal insurance, utility bills and credit cards – comparing the business electricity market is of no difference.
Many providers are out there waiting to tempt you with introductory offers, good deal contracts and prices and potentially special offers and promotions too.
Having so many different providers competing for your business puts you firmly in the driving seat.
Before switching providers though there are some key fundamentals to be aware of:
- Make sure you completely and fully understand the contract you are about to enter in to, and how this will benefit your business;
- Read the Terms and Conditions and be aware of any clauses;
- Keep on record all contracts and correspondence with providers (including full names and dates of those spoken with) in case these are ever required for a dispute at a later date;
In summary it is advisable to be on top of your electricity contract rather than it being on top of you. Be in the know about your contract terms, dates and notice periods.
Look at alternative contracts and providers once your own contract is up for renewal and be aware of any notice period you need to give when switching.
If you are a micro business some further caps and notifications will be sent to you to help you manage this.
Please use the following options to contact us here at Business Electricity Guide, or alternatively use the form opposite: