10 Point Guide For Controlling Business Energy Costs
By Richard Eden
In the current climate, cost control is a vital discipline for all businesses. Energy costs have continued to rise in recent years and have become an increasingly significant element of total expenditure for businesses.
However, since deregulation of the energy markets, competition between the energy companies has been fierce and the opportunities to save money can be substantial. Here is a 10 point guide on reducing your business energy costs.
1. Find out when your contract is due for renewal
Most businesses are in fixed contracts for their gas and/or electricity. This means that as a business, you can only switch at the end of the contract and you also need to give adequate notice to the energy supplier.
Knowing when your contract is due for renewal ensures that you are able to put yourself in a position to enable you to shop around and switch if there are better deals elsewhere.
2. Give adequate notice to your existing supplier
Most energy suppliers have ‘evergreen’ contracts. This means that at the end of a contract, if you have not given notice, you will automatically be rolled over into a new contract, usually one or two years in length. Finding out when your contract is due for renewal and the amount of notice that you need to give is vital. Some suppliers require 3 months notice and if you miss this deadline, you could be rolled over for another contract term.
Also ensure that you give notice in the correct way. Many will only accept written letters, others will accept other methods such as faxes.
3. Shop around for the best deals
Prices vary greatly between energy suppliers and there are many factors that can influence the price, such as wholesale market activity and where prices are shown. For example, online price comparison sites such as www.ukpower.co.uk are price led channels, with only the cheapest supplier getting the business, so many suppliers price their energy specifically to win that business, often cheaper than if the customer was to go direct.
4. Compare a range of prices
Brokers are paid a commission by energy companies for each business that they sign up. These commission rate can vary from supplier to supplier and so some there can be an incentive for a broker to place business with a supplier that is more commercially beneficial to themselves. To ensure that you are getting the best possible deal, it is vital to get several prices from different suppliers so that you can make an informed decision. www.ukpower.co.uk are committed to listing energy suppliers by price, regardless of commission amounts so that you can easily see who is cheapest for your business.
5. Be careful what you agree to
Many energy brokers do verbal contracts. This is where they record the conversation and that becomes a legally binding contract with the energy supplier. It is very important that as a business, you are aware that this happens and are careful about what you agree to. A good practice is to request a copy of any quoted rates in writing (by email or fax as prices can change daily) before you agree to entering into a contract. If done properly, there is nothing wrong with verbal contracts and they can save time. You just need to be fully aware of what you are agreeing to.
6. Check terms and conditions
Before you switch, check the new supplier’s terms and conditions carefully. A good broker can also help to identify the key points in the terms. For example, how much notice will you have to give at the end of the contract? Can the supplier change prices during the contract or are prices fixed? A good broker can help you answer all of these questions.
7. Avoid broker fees
Some brokers will charge a fee for their service, or have a contract which entitles them to a percentage of any savings that they make for your business. Energy brokers are paid commission by the energy supplier anyway, so you should avoid these types of deal. You would most likely find the same energy rates elsewhere without incurring the additional broker fees.
8. Ensure your current energy account is paid up to date
When you switch your energy supplier, your existing supplier can object to the switch for a number or reasons, such as still being in a contract. Another common objection is if you have any unpaid bills for your account. When preparing to switch, it is good practice to settle any outstanding bills, to reduce the chances of your current supplier objecting to the transfer.
9. Protect your credit rating
While energy suppliers compete for new business, they are still very cautious with what they perceive as risky businesses, especially in the current climate. Energy suppliers will carry out a credit check before finally accepting a business as a customer. Therefore, in order to give yourself maximum choice, protecting your credit rating is very important.
10. Be energy efficient
While reducing the amount that you pay for your energy is a great way of lowering your energy costs, another way is to use less energy. It is also good for the environment! There are simple changes that you can make that will reduce energy costs over a year. Switch computers and lights off at night, use energy saving bulbs, reduce the heating… There are many ways to reduce your energy consumption, some are obvious and some require creative thinking, but the results can be staggering.
