Getting the right energy deal

For busy people running small and medium sized businesses in the UK, their energy costs are unlikely to feature highly on their ‘to do’ list – and are more often a nagging thought in the back of their minds that they could probably get a better deal. With energy it is often a case of ‘out of sight and out of mind’ – most people don’t even think about how vital it is unless it is suddenly not there. Yet very few businesses would buy any goods or services on a regular basis without regularly shopping around for competitive quotes. As Trevor Loveday, Head of Communications at Ofgem, the government’s energy regulator, points out, “There is a very competitive energy market out there with a significant number of suppliers vying to have you as a customer – as a business owner or manager it’s important to at least have a regular look at the market and shop around for the best deal.” Binoy Dharsi, Lead Analyst for Energy & Utilities at Datamonitor, says that at the moment though, there are very few businesses out there shopping around, “Ninety percent of businesses are staying with their current supplier at the moment – they undoubtedly got a good renewal price initially but they have probably now got apathetic and forgotten to hunt around for a better price.”

Many business people who switched supplier once several years ago may still be thinking that they are on the best tariff, but as Caroline Joseph, Sales Director at Independent supplier BizzEnergy says, “Just because you made a good decision once, five years ago, don’t assume it’s still the right decision.” In fact, suppliers across many industries often use competitive pricing to acquire customers and don’t necessarily continue to be competitive once the customer has been with them for several years. From April 2006 to April 2007, the market saw a 20% reduction in wholesale electricity prices due to the concerns over a gas shortage being alleviated with the opening of the Russian supply lines. However, BizzEnergy’s Joseph adds, “The price of electricity is still on an upwards trend, so companies would be wise to shop around now for the most competitive quote and then look to secure a longer-term deal at that price.”

According to Datamonitor research from October 2006, 80% of SMEs have now switched electricity supplier. Any company in the remaining 20% still having never switched really should put it at the top of their ‘to do’ list, as they will undoubtedly be able to save hundreds of pounds a year. A business that switched its energy supplier once several years ago may also have been put off switching again due to the hassle involved and the time it took. However, with millions of switches experience behind them, energy companies have ironed out almost all of the problems of working together with all the organisations involved in a switch. BizzEnergy’s Joseph says that, “The obstacles to switching energy supplier today are much lower than they were five or ten years ago and it is a much less stressful process. The potential savings a business can make definitely outweigh the value of the time spent gathering information and organising to switch.” Switching is also not an intrusive process and does not involve anyone coming to the business premises or any new equipment – it simply means getting bills from a different supplier and paying less.

Ofgem also recommends that when it comes to switching, it’s worth planning ahead and taking some time to properly assess all the options. Ofgem’s Trevor Loveday says, “When gathering alternative quotes from suppliers, make sure you give them as much information as possible up front about your energy consumption – that way the suppliers can offer you the most accurate quotes.” Ofgem also suggest that business owners and managers build in time to look through all the quotes and evaluate all the details, especially the terms and conditions.

So the message is coming through loud and clear for business owners to move that nagging thought to the top of the to do list and, by putting a small effort into crossing it off, they stand to save significant amounts from their bottom line – as well as doing their bit for a greener planet – which has to be good for business.

For further information and advice on business energy supply switching visit: www.smallbusinessenergy.org.uk or www.energywatch.org.uk.