2015 brought yet another disappointing summer in the UK, but the chances are you didn’t have to turn the lights and heating on too regularly.
Well that’s all about to change as the winds pick up and the leaves begin to fall.
Autumn is here and it won’t be long before you have to think about winter and the excruciating business energy bills that come with it.
The unit price for gas and electricity has fallen this year. It could have fallen even further if you joined the Business Gas.com collective switching group before the October deadline.
If you weren’t quick enough to join the gas buying group then you’ll have to go about cutting your gas bills the hard way – by reducing consumption.
Here are our top tips for slashing business energy bills by curbing usage.
Create an eco-friendly office environment
Making environmentally friendly choices when it comes to kitting out your office is a great way of curbing consumption and minimising your businesses’ carbon footprint.
Changes could be as big as replacing the office fridge with a more environmentally friendly alternative or as small as fitting draught-proof strips underneath doors. When you come to make these changes always think about the payback time.
Payback Time (years) = Initial Investment (£) / Annual Savings (£)
Working out payback time helps you make informed decisions about whether a particular change is worth the initial investment. If draught-proof doors will be paid back in one year then they are definitely worth having whereas if a fridge takes 20 years to pay back you might have to think more carefully.
Start using your smart meter properly
Smart meters are already fairly common in medium sized and large business premises. But this doesn’t necessarily mean you are making the most of your meter.
Simply watching data in real time, or half-heartedly analysing smart meter information won’t do much to change your consumption patterns in the long run.
You should collect and process all the raw consumption data you can, turning it into actionable information. Try comparing consumption data to local temperature data and see if you can learn anything about how office air conditioning usage in your office responds to the weather.
It might be worth getting an expert to do this for you.
Switch off
It might sound simple but switching off office equipment at night is absolutely crucial to reducing your consumption and energy bills.
The Carbon Trust says that a standard photocopier left on standby overnight wastes enough energy to make 30 cups of tea. Before you go home at night go around and check all screens and other unnecessary electronics are cut out.
If you keep regular opening hours it might be worth thinking about creating a separate circuit breaker for non-essential equipment which automatically turns off after 6 PM.
Consult an energy switching expert
The market for energy is highly competitive and large sections of it are still shrouded in secrecy. In these conditions it pays to have someone who understands the market on your side.
Business Gas.com is full of energy market experts and we’re constantly using our expertise to leverage suppliers and get the best deals for our customers. Get in touch to find out more. Call: 0800 157 7175
More than a million households switched away from the ‘big six’ energy suppliers in the past year.
Figures from Cornwall Energy showed that about 11 per cent of homes now buy their gas, electricity or both from smaller independent companies.
These figures are significant for businesses because it demonstrates that households are waking up to the real savings on offer if you switch suppliers.
Traditionally, businesses are more sensitive to energy price than consumers. Meaning they are more likely to switch if there’s a better price elsewhere.
Lots of business owners have already seen sense and switched from the larger suppliers to other companies which are more responsive on price.
But many more businesses haven’t yet made the switch. In all likelihood, this means that they are not on the best tariff.
Ultimately it comes down to ignorance or lethargy. And that can be very expensive.
Citizens Advice Week claims that households can save around £200 if they shop around for a better energy supplier. The potential savings for businesses will be even greater because they use more energy.
According to reports, ministers and regulators are still trying to decide how best to encourage more households to shop around.
Despite the huge savings on offer, many customers are ‘sticky’ with their original supplier.
There are a lot of reasons cited by people why they don’t shop around for the best deal. These include not knowing about better deals on offer, not wanting the hassle of switching, and in some cases, not knowing energy has been privatised.
Business Gas.com’s Head of Energy Procurement Paul Rafis said: “The fact that so many more homeowners are switching to the smaller suppliers should really get businesses thinking about their energy supply.
“Earlier in the summer the Competition and Markets Authority found that suppliers like British Gas and SSE were overcharging customers by a total of £1.2 billion. Any business which is still with one of these suppliers should seriously consider trying to find a better deal.
“Domestic customers as well as some business owners have all sorts of reasons why they don’t shop around for a better deal, but ultimately it comes down to ignorance or lethargy. And that can be very expensive.
“At Business Gas.com we make switching suppliers easy. Energy managers just get in touch and we negotiate the best price on their behalf.”
Communal switching schemes
One other explanation for the increasing number of switching customers is the growing popularity of group switching schemes.
These types of schemes allow home and business customers to group together and use their collective bargaining power to get more affordable energy. As these schemes get more well known, more people are waking up to the potential savings.
Business Gas.com manages two communal switching schemes for businesses across the UK. Find out more on our communal switching page.
For our help switching your business gas or electricity supply, get in touch today. Call: 0800 157 7175.
Wholesale gas prices fell in the UK on Wednesday as reduced demand from gas plants boosted oversupply.
In the morning, Reuters reported that the price for next day delivery slipped by 0.30 pence to 39.80 p/therm. Meanwhile gas for immediate delivery dropped 0.50 pence to 39.90 p/therm.
The price drop came after National Grid data showed that the UK gas system was oversupplied by 22 million cubic meters (mcm) on Wednesday.
The oversupply came after two nuclear reactors came back online earlier in the week. Traders said that this eased gas demand from combined cycle gas turbines.
After the official winter gas season began in the UK on the 1st of October prices were down across the board. The October price was down 0.10 pence while the winter contract price dropped 0.05 pence.
Elsewhere, sources reported that Russia’s state-run Gazprom agreed a tentative deal to supply Ukraine with gas for the winter. The easing of relations, in addition to the perceived willingness on behalf of the European Commission to mediate will, over time, calm nerves and relieve some of the upward pressure on prices.
Downward trend in wholesale gas prices
More generally, the October price fall is a continuation of the downward trend in wholesale gas prices.
Business buyers who are considering when to buy a fixed-price contract for summer 2016 might be tempted to see how far this downward trend will continue.
But the waiting game should be played with caution.
With forecasters predicting one of the coldest winters for 50 years there is a strong possibility that the prices could rise before the warmer months.
Risk adverse buyers might think about banking soon; current prices are likely close to their floor.
Are these savings being passed on to the end-user?
Smaller firms might be concerned that this fall in wholesale prices will be slow in filtering through the supply chain. Mainstream suppliers are famously slow to reduce prices in line with wholesale price cuts.
Small companies in Greater Belfast will enjoy a recent 10% price cut from SSE Airtricity. This shows certain intent on behalf of suppliers to react to changes in the market price.
At Business Gas.com we try to keep our day-ahead prices as current as possible. Changes in the wholesale market price will be reflected in our rates. See our latest prices and calculate how much you could save.
Collective energy buying is a practice where a group of consumers (businesses, homeowners or even small municipalities) get together and pool their resources to buy gas and electricity at cheaper prices.
Sound like hard work? Think again
Although there is no set model for how these collective switching schemes work, the arrangement is normally facilitated by a third party who is in charge of organising the individual members and negotiating contracts.
These third parties usually organise collective buying groups. But the group’s individual members never have to meet or talk or even live in the same country. As long as each member uses over a pre-determined threshold, and as long as they can all renew a contract at the same time (usually in September) then they will be accepted. In this way, the barriers to entry are very small.
Surge in popularity
In 2012, collective purchasing schemes received a resounding endorsement from the government, especially those targeted at individual consumers.
One Department for Energy and Climate Change (DECC) document reads: “Collective purchasing and switching have the potential to empower consumers to get a better deal on their gas and electricity bills and save individual consumers having to shop around and compare tariffs themselves.”
After some initial interest from consumer groups, enthusiasm for residential projects never really translated into a wide scale uptake. In the last year or so, however, similar schemes on the continent in countries like the Netherlands and Belgium have been very successful. Not surprisingly people in the UK are starting to take notice again.
MoneySuperMarket boffins reckon that households can save over £200 pounds per year on their energy if they take part in what they call a ‘collective purchase switching scheme’.
Unfortunately, no one seems to have done similar research into collective energy switching schemes for businesses. But from where I’m standing, I can tell you that my business gas buying groups have never been bigger.
Advantages of aggregate energy buying
- Cheaper energy prices
This is without doubt the biggest advantage to collective switching. And the best part, the prices only get cheaper as more stakeholders join. So you can actively reduce your energy bills by encouraging more participants to sign up. Think of it like a ‘refer a friend’ bonus – but there’s no limit to how many people you refer, and the M&S Gift Cards are a lot bigger.
- Potential for green energy buying
As we’ve already mentioned, there’s no clear structure or pattern for energy buying groups. The terms of the deal are normally laid out by the third party, but they aren’t always formed with lower prices in mind.
Other potential benefits include things like a collective commitment to using green energy, or a deal on energy saving products.
- Easy to join
The one, relatively minor barrier to entry is that you have to meet certain usage thresholds. This might sound daunting but Business Gas.com has a buying group for companies which use under 100,000 kWh of gas per year.
Residential buying groups tend to be run in small local areas. Careful research will reveal the right one for you.
- Many policies include a free smart energy meter to help keep track of consumption
Because it’s important to track member consumption, the third party organisers will issue companies with smart meters, gas loggers and other intelligent monitoring systems to help them keep track of usage.
These technologies not only help to monitor energy consumption, but they also have the power to help members cut their energy bills by identifying and eliminating areas of waste.
- Peace of mind and a sense of ‘safety in numbers’
Most people laugh when I talk about safety in numbers but it really is true. I’ve managed two successful business gas buying groups for a number of years now and peace of mind is probably the comment I hear most frequently from members.
Buying energy is stressful. Especially if you are purchasing on behalf of a company and you are coming under pressure to reduce bills by 10 or 20 percent. Most find reassurance in the fact that their energy is in the hands of a market expert. And there’s a certain ‘je ne sais quoi’ in knowing that your fate is tied to a number of other businesses.
The beauty of collective buying schemes is that the third party takes all of the hassle out of managing energy, while also delivering great prices for all the businesses involved.
There are downsides – one of the biggest is that the collective quote can only be renewed once a year, usually at the end of September.
If you are very quick you might be able to sneak in, otherwise you’ll have to go on a ‘waiting’ contract which is more expensive.
For a limited time Business Gas.com are offering businesses a free M&S Gift Card worth up to £750 when they join one of the Business Gas.com gas buying groups.
The future looks smart for energy consumption. Following some high profile success stories in the non-domestic energy market, smart-thermostats and other smart heating systems are beginning to break into the mainstream consumer market.
Domestic and non-domestic energy customers are going to be better informed about their energy situation. They will know how and when to use energy most effectively to cut consumption and reduce their bills.
Smart meters vs. Smart energy systems
There is some disagreement about which technology will have the biggest impact on the smart energy future. The government has invested heavily in the smart metering project, but some industry bigwigs believe this technology will be outdated before the end of the decade.
Representatives from Co-operative Energy recently told the Competition and Markets Authority “technology such as British Gas’ Hive and Google’s Nest indicated the future of energy consumption.”
Smart thermostats
Hive is probably the best known ‘new wave’ domestic smart thermostat. As the colourful adverts boast, Hive lets homeowners control their heating from anywhere at any time – by phone, tablet or laptop.
While many people will excite at the prospect of coming home to a warm house, the potential for this technology is much greater. In the future we might expect, for example, smart heating systems to switch off fridges when energy is at its most expensive (smart energy systems will make meters more flexible so the unit price for energy might vary significantly throughout the day).
Other technologies are available and some work slightly differently from the ‘smart-thermostat’ model adopted by Hive. The Nest Learning Thermostat, available from Npower can self-programme a heating schedule based on the user’s past preferences and lifestyle. Designed by Google, it is also an exceedingly attractive piece of kit.
One of the early crystallisations of the much heralded ‘Internet of Things’, smart home heating systems give domestic and non-domestic energy users more control over their energy purchasing. The idea is that this increased control will translate into more efficient energy use when implemented correctly.
Growth of the technologies
The European smart-thermostat market is set to boom. Driven largely by the EU’s 2020 climate emissions targets, we can expect demand and take up to boom in countries like the United Kingdom, Germany, the Netherlands and France.
Market analysis from Frost & Sullivan found that the market earned revenues of $152.5 million in 2014 while it expects this figure to rocket up to $2,570.6 million in 2019.
Much of this growth in demand will come from the domestic sector, but small and medium sized businesses will almost certainly take notice. Smart thermostats offer significant cost-savings in the long run, especially when users get to grips with the technology. However, initial prices are still high, so adoption rates are low in the medium and low-end customer segments.
Smart thermostats for non-domestic energy users
Clearly, non-domestic users who on average use more energy than their domestic counterparts, will have more opportunities to save on their consumption. The saving potential is compounded because businesses have access to more advanced monitoring and heating systems which can reduce consumption by even larger degrees.
While domestic thermostats like Hive and Nest will be suitable for many smaller businesses, forward-thinking larger firms should be investing more heavily in the technology. Fundamentally, this is a technology market so systems can always be improves with more sensors, more connectivity functions and better interfaces. All of these things have the power to reduce consumption.
When done correctly in large energy-hungry businesses, a smart consumption system can pay huge dividends. Previously, we wrote an article about how one Marriott hotel managed to slash their energy bills by using a series of clever sensors and a demand-response programme to tweak consumption in key areas.
Businesses in other industries have enjoyed similar success. A similar programme introduced in Tesco stores generated energy savings of up to 30%.
In all likelihood, energy is one of your top three business expenses. Whether you run a restaurant, manage a manufacturing company or own a chain of stores, 
gas and electricity bills can seriously hinder your overall financial health.
Every business should periodically assess energy procurement, evaluating the current supplier and thinking whether there is a better deal available elsewhere. And there are five very good reasons why you should think about doing this today.
1. Your fixed-price energy contract is probably up for renewal
Autumn is by far the busiest time of year for energy buyers. Traditionally, the end of September/start of October is energy contract renewal time and most of the major suppliers still stick to this. You can renegotiate a contract at any point throughout its duration, but autumn is usually the deadline. If you fail to renew before the renewal date then you risk rolling over onto a bum contract (see below).
When renewing a contract, you should bear in mind that they can take some time to negotiate and finalise, particularly during the autumn months. Make the most of cheap wholesale energy prices by planning for the next five years.
2. Avoid the contract rollover trap
The rollover contract trap is an expensive one to fall into. Despite lots of media and regulator attention, many suppliers still have business-punishing contract rollover policies. If at the end of your energy contract you fail to cancel it within a set time period, then your energy supplier will (in a lot of cases) automatically sign you up for a new contract.
This new contract will be nowhere near as competitive as your ‘introductory offer’ contract and will not be good value for money. With renewal season on the horizon it pays to be vigilant and proactive.
3. Wholesale gas price could rise after the UK’s “Indian Summer”
Earlier this month we uploaded a blog post commenting on how the ‘cold start to September’ was pushing up wholesale gas prices. Later meteorological forecasts though replaced this cold snap with a significantly warmer ‘Indian Summer’ which many of us have been enjoying this last week.
The warmer weather has soothed gas prices somewhat, but buyers should be concerned about uncertain and extreme weather in the months to come. With unpredictable forecasts, prices could jump around considerably, making a fixed price contract an attractive proposition for ‘budget-certain’ businesses.
4. Registration for Business Gas.com buying groups is officially open
The Business Gas.com gas buying groups present a strong opportunity for businesses of all shapes and sizes to save money on their gas bills. By teaming up with other like-minded businesses, you can increase your gas buying power to purchase at cheaper prices.
All the Business Gas.com buying groups have a renewal date of the 30th September, don’t miss your chance to save.
5. Get a free M&S voucher
For a limited time, Business Gas.com is offering business owners a free Marks and Spencer’s gift card with each new gas contract. Negotiate a new contract today and receive a free £250, £500 or £750 voucher in time for Christmas.
More information: Business Gas.com gift card offer.
For advice on switching or to learn more about any of our offers please get in touch. Call: 0800 157 7175.
When it comes to purchasing business gas or any utility for that matter, owner-managers have two main choices. Do you go to a supplier directly and try to negotiate your own rate. Or do you arrange a contract through a broker or third party consultant.
Your decision should depend on a few key questions:
- How much do you consume?
- Do you have a good understanding of the market?
- How much time do you have to manage consumption?
- Do you require budget certainty?
The key advantage of contracts which are directly negotiated with the supplier is that they tend to be simple and stable. These work well for smaller businesses where demand rarely fluctuates from month to month.
Most suppliers offer simple fixed-price contracts which provide budget certainty, leaving your top minds free to focus on what’s important to your business.
No risk no reward
As with so many other ‘safe bets’ though, the potential returns on a directly negotiated contract are small. If you are a manufacturer, or if you run another business where consumption fluctuates a lot then the potential rewards are a lot greater.
If your business has a lot of flexible processes, and doesn’t require as much budget certainty then you should at least discuss your options with a third party consultant or broker. Choosing to work with an energy market broker gives you the option of purchasing a more sophisticated energy ‘product’.
Instead of purchasing at one set rate, you can take advantage of different price bands and purchase energy at different prices throughout the year (at higher or lower prices).
Of course, if you purchase a lot of energy then there’s nothing stopping you from negotiating a more sophisticated contract directly with the supplier. However, a lot of businesses don’t have the resources to employ an energy market expert. And many more don’t want the hassle of negotiating and making big buying decisions month in month out.
This is where third-party brokers come in. The main function of an energy broker is to source contracts from a range of suppliers. If you choose a flexible purchasing arrangement then good brokers will give ongoing advice on when to buy, when to wait and any other purchasing decision you come across.
Choosing a good broker
Over the last decade or so energy brokers have received their fair share of negative press. Although I’m sure that most commentators would agree that it is a few bad apples spoiling the bunch.
Even so, it is important to choose a broker who you can trust. In response to some of the negative attention directed at third party intermediaries an industry binding code known as the Third Party Intermediary (TPI) code of practice was introduced which set certain standards for energy brokers.
Business Gas.com are proud to participate in the TPI code of practice scheme.
Download our guide on business gas buying strategies for more advice on information on going direct vs using a broker.
Day-ahead, week-ahead and month-ahead gas prices have all increased, and the threat of more hard weather looms for UK businesses.
Wholesale natural gas prices increased yesterday as a frosty start to September boosted demand. Meanwhile supplies of liquefied natural gas (LNG) fell and anticipated Norwegian flows dropped for the coming week.
After a record breaking summer of above average heat, Brits have been brought back to earth in September, as below normal temperatures led to higher demand and higher prices for natural gas.
Higher day-ahead gas rates at the start of September
Yesterday, prices for immediate delivery were trading 0.35 pence higher at 38.60 per therm at the start of the working day. Meanwhile day-ahead prices for Wednesday had increased by more than double, trading 0.90 pence higher at 39.15 pence/therm.
By the end of the trading day though, day-ahead rates had jumped by more than five percent to 40.20 pence per therm.
The National Grid showed that the British gas system was oversupplied by 9.6 mcm on Tuesday morning due to higher flows from Norway via the Langeled pipeline. However, these flows are expected to dip next week when maintenance ends at Germany;s receiving terminal in Emden on Sept 5th.
Cold weather prompts gas price rises into the winter
The cold weather snap has also affected week-ahead and month-ahead rates. Prices for delivery on working days next week were up by about 5.2 percent according to analysts at Thomson Reuters Point Carbon.
Looking farther into the future, prices for winter delivery were up by 0.40 pence to 44.50 pence/therm. This comes after the Australian Bureau of Meteorology said yesterday that The El Nino phenomenon, the warming of Pacific sea-surface temperatures, is the strongest it has been since 1997-1998.
The potential is that this weather event could lead to a period of extreme weather and higher domestic and business demand for gas.
After two relatively mild winters, this return of harder weather could upset predictions about low wholesale gas prices this winter. Rising prices at the start of September could be the early stages of a price spike which will have a knock on effect both on the supply of and demand for gas in the UK.
As always in these situations, buyers face some difficult decisions about when and how much to buy. Essentially, gas buyers are betting on how mild or extreme the coming winter will be.
For advice on how market events affect your buying strategy, speak to one of our expert brokers today and we’ll be able to point you in the right direction. Call 0800 157 7175.
Alternatively, if you are a small or medium sized business, why not consult our Business Gas Buying Guide for SMEs.
British Gas is in a spot of bother again. This time, the Business-facing arm of the company, British Gas Business saw its profits tumble 95% in the first half of 2015. This comes after a billing blunder in 2014 which put costs up and impacted on the company’s ability to deliver good customer service.
British Gas owner Centrica said that the delay to customer bills resulted in the build-up of bad debt on top of the additional costs incurred in trying to resolve the issue. Both of these extra expenses have had a detrimental impact on the Business arm’s profits
Although Centrica says that customers are now being served as normal, there is no telling how much reputational damage has been done to the British Gas brand – particularly in an industry where clients value certainty on their monthly bills.
Possible job losses at British Gas
British Gas Business is now poised to move ahead with a cull of employees as the company refocuses on more customer-facing activities.
It seems that while the British Gas Business arm has struggled in recent years, residential energy supply reported a 99% increase in profits up from £265 million to £528 million in the first half of 2015.
It anticipated that the business re shuffling could lead to as many as 6,000 job roles being phased out.
When it comes to the gas and electricity markets, my aim is to both secure my clients the best possible price and to reduce their usage, saving them more money on their gas and electricity bills.
Most consultants and energy advisors treat this as a job. For me it’s a vocation. I work the hours that other advisors don’t, searching for alternatives. They can become available any time of the day or week, and I’m on hand to act on this instantly. I examine the commodity market, world events and political ramifications to gauge how these are affecting the energy market and this gives me a head start over the competition when it comes to making smart decisions for my clients.
Although BusinessGas.Com is an established energy business, with many happy clients, I’m always keen to improve its operation by always going above and beyond do to get the best rates possible, whether on fixed priced contracts or on flexible rates.
Energy market expertise
This is my job. Whilst I’m not a Premier League footballer or a F1 racing driver, I believe that I’ve honed my skills to the point where I’m an expert in the energy market and I am proud of the savings I can make that my competitors can’t – just ask my clients!
A key lesson I learned is to look beyond the short term, thinking forward by at least 3 or 4 years, when prices will be a lot higher than they are at the moment. I look to lessen the impact it will have on my clients and help soften the financial implications it has on their business.
If you use Business Gas.Com, you can be assured that we will look at the best solutions for your business. Why not find out for yourself what gives is the edge when securing the best business energy rates? Give me, Paul Rafis, a call. My direct line is 0161 870 6349 or you can drop me an email at paul@businessgas.com. I will be glad to give you a no obligation quotation and show you what can really be done in the energy market.
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