WITH the new energy price cap for consumers set to come into force in October, bill payers all over the country are concerned about what this will mean for their finances. However, for business owners, this could be even more catastrophic.
Reports of businesses already closing their doors before the summer has ended, and many more expected to follow over the coming months as the temperature drops, means the coming months are crucial for businesses, especially small and medium sized businesses, which make up 99% of businesses in the UK.
As there is no price cap for commercial energy, the amount that companies can charge per unit is unlimited. This means that as the cost of gas rises, and the domestic price increases, so does commercial energy – but with an unlimited cap.
Unfortunately this often hurts SMEs the most as they can’t afford to there isn’t much business owners can do about the cost of energy itself, but there are steps they can take to reduce the amount they pay. And one of those is switching energy suppliers.
Just like domestic energy, business owners can switch their energy supplier, allowing them to shop around for a better deal. It might seem like a daunting task, especially with the cost of living crisis having a significant impact on business owners, but the process is actually very straightforward.
To help business owners navigate the process, Connor Campbell, business finance expert at NerdWallet, has revealed how to switch – and ensure you’re getting the best deal.
Connor said: “Business energy can be one of the biggest operational costs related to the running of your organisation. And just like with your domestic energy at home, sticking with the same supplier for many years could mean you are not getting the best deal for your business. Therefore it pays to shop around and ensure you’re getting the best possible price for your energy – something which seems more important than ever at the moment.”
“Although there are a bunch of rules and requirements you have to keep in mind when looking to switch suppliers, it’s not too dissimilar from switching your gas and electricity in the home. So it’s really worth seeing if you’re able to move.”
Switch your business energy provider in 5 simple steps:
- Find your current energy supplier
The first thing you need to do is find the name of your current business energy supplier. If you have been at your business premises for a while, it will be on your most recent business energy bill. But if you’ve just moved into a new business premises, you may not know your supplier. In this case, you can contact your landlord or, if you have their details, the previous tenant or owner to ask who your business energy supplier is.
If you have no luck, however, there are other ways to find your gas and electricity suppliers:
- The Meter Point Administration Service can help find your business gas supplier.
- The Energy Network Association search tool can help identify your electricity provider. This will involve first finding your network operator, which can then give you the details of your supplier.
- Check your contract
Once you have the name of your provider, you’ll be able to find out when you can switch suppliers.
If you are still under a fixed-term contract with your supplier, you will usually have to wait until that contract has expired to switch providers at the same business premises.
As well as the expiry date, you will also need to check if your contract involves a notice period. This could be up to 90 days.
In order to avoid rolling over to a more expensive tariff at the end of your contract, and secure a smooth switchover, you can issue a notice of termination to satisfy the notice period before your expiry date. But you will need to check whether your supplier accepts a termination notice over the phone, or whether you need to send written notice in an email.
If you’re not in a contract, it’s much easier: if you don’t negotiate a new deal with your energy supplier, or fail to immediately switch to a new provider, you won’t be left without gas or electricity. Instead, you’ll be moved to your original supplier’s ‘out of contract’ rates. These are likely to be far more expensive than your fixed-term contract.
To switch from an out-of-contract rate, you may still need to provide notice to your supplier. This should, however, be shorter than the notice period for a fixed-term contract.
If you’ve moved into a new premises, you will be placed on a ‘deemed rate’. Like an out of contract rate, this will typically be more expensive than a fixed-term contract.
However, since you did not pick this contract yourself, rather inherited your provider, you are free to switch business energy suppliers at any time.
- Get the details of your contract
Before you start applying to switch business energy suppliers, it’s best to make sure you have all the details you need to hand.
This will include, but is not limited to:
- The postcode of your business premises.
- The name of your current business energy supplier.
- The details of your current business energy contract, including its end date and notice period length.
- The current cost of your business energy per unit in kilowatt hours (kWh), as well as any standing charges.
- Your annual energy usage.
You will be able to find most of this information on either your most recent energy bill, or your business energy online account.
- Compare deals
It is always worth asking your current provider if they can switch you to a cheaper tariff in the first instance. Once you have your current provider’s offer, you can then start comparing the merits of each supplier. You should make sure to take into account:
- The unit cost per kilowatt hour (kWh).
- Any other charges and maintenance fees, including your standing charge.
- The length of the contract, any exit fees, and whether it has a notice period.
- Reviews of their customer service, specifically what they are like at responding to urgent inquiries.
- Whether the business energy supplier is offering any extra incentives to sign a contract.
- If the contract has a 14-day ‘cooling-off’ period, in case you wish to pull out of the contract after signing – this is unusual with business energy contracts, unless you are a micro business.
- Whether the supplier offers 100% renewable business energy.
A comparison site is usually the first port of call when it comes to comparing your business energy as you’ll be able to compare a whole range of providers for your business energy. Alternatively, you may want to consider a business energy broker. For a fee, they can carry out the negotiation process with the supplier for you.
However, if you do use a business energy broker, it is important to make sure they offer a full-market comparison, and that you check exactly what they will require payment for.
- Finalise your switch
Once you have selected your new business energy supplier, and signed the contract, it is time to finalise your switch.
This may involve providing your payment details or setting up a direct debit, creating an online login, and supplying up-to-date meter readings for your gas and/or electricity. Also, remember you must satisfy the notice period for your current supplier and issue a termination notice before you make the switch.
It will normally take between three and six weeks for the business energy switch to be completed, and you will only be able to pull out of the contract once it has been signed if it has a 14-day cooling-off period, and you are still within that period of time.
Unless you are a micro business, many business energy suppliers will not provide you with the option of a cooling-off period, so it is important to make sure you are happy with the terms of your contract before signing.
For more information, or to compare suppliers, visit the NerdWallet website: https://www.nerdwallet.com/uk/business-energy/