Seek assistance Make It Cheaper, another energy consultancy, offers a free webpage that
can calculate how long a business has to switch provider -
http://www.makeitcheaper.com/how-to-switch/window-checker.aspx. At the very minimum, diarise when your notice period starts and finishes when you take out a new contract. Consultancies such as Utility Options will do this for you as well as manage your account, deal with queries and any metering problems. Apart from the consultancies, all of the main names that you probably
know –
moneysupermarket.com,
gocompare.com,
uswitch.com and others – can assist. But unlike comparison websites for consumers, these sites will not run an online search leaving you to pick the best deal from the options listed. Instead, they require you to make contact where they then take the details needed to perform a search. They’ll then let you know what is in their opinion the best deal for your circumstances.
Exit route As we’ve seen, businesses cannot get out of their energy contracts just
because they don’t like the tariff. But there is an exception - if you move premises you can leave your old supplier. However, don’t move into the new premises and forget to review your energy needs thinking you’ve escaped a tyrannical supplier and are now contract free. On the contrary, you’ll have inherited the supplier that the previous occupier was tied to and you’ll be charged ‘deemed’ or ‘out of contract rates’ which will be much higher – sometimes twice as much as was charged to the previous tenant – as you are potentially a bad risk. There is only one solution and that is to enter into a formal energy supply contract. If you play your cards right and keep switching you can take advantage of
‘new customer’ rates offered by the energy suppliers as they try to win new business. These rates are often used as loss leaders on the basis that a good proportion of businesses that sign up for them stay and end up on more expensive tariffs. Again, you’ll need to keep tabs of your notice window to play this game.
Gotcha’s Unlike supplies made to domestic users, businesses users have a different
set of criteria that determine the rates that will be charged - that’s the reason why you cannot search for a supplier online. Further, unless you are a huge consumer of electricity, say an aluminium smelter, there’s no haggling over the price per unit. The first thing to note is that your credit score has a serious impact on
the rate quoted and some suppliers won’t offer to supply businesses with a credit score under 46/100. By definition this means that those firms with a score over 46/100 get better rates. Crucially, you need to do what you can to improve your business credit rating which will yield results for your business overall. Your postcode will have a bearing on the rate too as, for example, electricity transmission costs charged by National Grid (who own the power lines) are built into the unit charge. There are, for example, some pockets of Scotland where transmission cost are very high because the distance between generation and ‘consumer’ is so great. Whilst this something you cannot affect it can add between 10 to 15 per cent to the cost of a unit of electricity. The length of the contract will also determine the prices you pay.
Rather like the deals offered on a fixed rate mortgage, you’ll pay more initially for longer term deals because you’re hedging against rises in unit rates. But as rates rise – as they surely will (and are) the better the value you will see being returned and indeed, you could end up with a proportionately better deal than the market is offering to others. Whilst it makes little odds when you use gas, there are deals for night time electricity usage. So is your business able to utilise electricity at a lower night rate? At the same time, consider if your business is seasonal or a relatively low consumer of power? If so, you could be better off with a tariff that features a low standing charge leaving you to pay per unit consumed.
Some energy suppliers are pushing businesses to install so called ‘smart
meters’ on the basis that it will save money as they only pay for energy consumed instead of estimated. Bills that are estimated often lead to positive cash balances with the energy supplier. However, you need to be aware that smart meters are in their technical infancy and whilst they can aid cashflow, they will restrict the suppliers you can move to as a number of energy suppliers don’t yet support them. Ideally you should return meter readings to the energy supplier on a regular basis. One other thing to consider with smart meters is that whilst they report on
usage through a built in phone mobile phone SIM (not at your expense), they can also receive instructions to cut off your supply should a bill go unpaid. Unlike domestic energy users, there is no financial advantage to having a dual fuel deal with a supplier. However, for administrative purposes, it may still be easier to have one supplier for both gas and electricity. But just like domestic customers, there are savings that can be made by paying for usage via direct debit rather than by cheque on receipt of the paper bill – at the time of writing you can save 2 per cent with EDF and 4 per cent with EON. Lastly, charities shouldn’t lose sight of a valuable concession; that they
only VAT at 5 per cent on fuel rather than the 20 per cent businesses pay (domestic users pay at 5 per cent too). Charities that have missed this trick can apply for a rebate of the VAT paid over the last three years. So whatever your situation, don’t let inertia stop you from switching.
Moving energy supplier is not hard, difficult or time consuming. The new supplier, or the consultant, will make the switch for you. The bottom-line? Read terms and conditions carefully.
Statistics
Based on a 2011 Make It Cheaper Survey: • 54 per cent of businesses have never switched electricity supplier. • 18 per cent of businesses think that they cannot switch supplier.
Based on 2010 Ofgem Survey: • 7 per cent of 500 businesses managed to switch electricity. (18 per cent of domestic users switched).
• 79 per cent of businesses say they’ve not had (or couldn’t remember receiving) a renewal letter.
Business energy costs have almost doubled in the past 5 years. • Only 15 per cent of small businesses know what rate they are paying for electricity.
• A good price for electricity at the time of writing is just under 10p/unit (kWh) but some suppliers are renewing contracts at around 16p/unit and out-of-contract (deemed) rates can be as high as 30p/unit.
• Savings to be made can average 30 per cent. Problems? Ofgem (
www.ofgem.gov.uk) has delegated their complaints handling to:
Consumer Direct:
http://www.direct.gov.uk/en/Dl1/Directories/UsefulContactsByCategory/ Governmentcitizensandrightscontacts/DG_195948 For businesses and consumers and will help and advise on best course of action to complain.
The Energy Ombudsman:
http://www.ombudsman-services.org/energy.html) Will take a complaint if the customer is domestic or a micro business.
Consumer Focus:
http://www.consumerfocus.org.uk Similar to the Energy Ombudsman.
Sadly there’s little for larger businesses apart from Ofgem who will speak to a supplier if it’s a large supply problem. There’s no help for account problems.
SEPTEMBER 2011 • FOOTWEAR TODAY
• 47
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