UTILITIES - 15.01.2018

Property switch - energy switch?

Moving on

When you first move in to a business premises or change locations there are number of things to organise. Checking whether you have a good deal on energy doesn’t tend to be top of the list, so it’s tempting to do one of the following: (1) keep the company that currently supplies the new premises; (2) stick with the supplier you used at the last site; or (3) go with the first broker who calls. Those are the easy options but they are unlikely to be the best ones.

Raw deal

According to an investigation by the Competition and Markets Authority (CMA) the “big 6” energy suppliers make more profit on SME deals than they do on domestic and large businesses (in fact, the margin is double that for domestic and quadruple that for big firms). The smallest businesses appeared to be being ripped off most, mainly due to automatic contract renewals that cost 29% to 36% more than standard ones.

More are switching

A detailed assessment of attitudes towards energy amongst SMEs in the UK (published in 2016 for Ofgem) found that more small businesses are switching supplier, but it doesn’t appear to be common practice because it has been made deliberately complicated. Tip. Only one in four SMEs read their contract renewal details. Make sure you do - suppliers bet on you not checking or shopping around and therefore bump up their prices.

Tricky tariffs

More and more small firms are using energy brokers to help them wade through the options, but if you don’t like the sound of that then there are comparison sites you can use. But be warned, these might be trickier to get to grips with than domestic versions, so here are a few things to consider:

• think carefully about when your business uses energy and how much you use as this can affect the price you are offered
• check the length of the contract and that you’re happy with the billing (you want it to be clear and concise so you can keep track of usage)
• look for deals that allow you to combine your energy payments as these will often be cheaper
• think more broadly than just price - have a look at the company’s customer service record, for instance as a business you’ll want any issues to be sorted swiftly. Also check if there is any free advice on how to cut your bills. Many companies now offer free energy audits for new business customers to help them become more energy efficient.

Micro-businesses take note

Note. A microbusiness is defined as fewer than ten full-time employees and an annual turnover of less than €2 million (£1.8m); uses less than 100,000kWh of electricity; or less than 293,000 kWh of gas. If you are one it should be easier to compare prices these days thanks to the CMA’s investigation. Suppliers must now publish the prices they offer to all microbusiness so you can get a better idea of what you should be paying. You can’t be penalised for switching to a better deal after your contract has lapsed and you’re in the expensive rollover period, plus, you’ll also receive greater notice periods so you know when your fixed contract ends.