The Competition and Markets Authority (CMA) has released a report claiming that energy customers – including small and medium sized businesses, as well as microbusinesses – can save money by switching energy suppliers.
Recently, we reported that Government energy ministers were preparing to launch a fresh ‘energy-switch campaign’ and this latest report appears to represent Government redoubling against the naïve loyalty that ‘sticky’ energy customers show to their suppliers.
In its capacity as the UK’s primary competition and consumer authority, the CMA has been investigating the energy market since last summer. The headline announcement in the ‘updated issues statement’ reported that 95% of dual-fuel customer who held contracts with the largest energy suppliers would have saved money by switching suppliers between 2012 and 2014. But domestic customers are not the only ones losing out.
Non-domestic SME and microbusiness market
Large sections of the investigation were aimed at the retail supply of energy to non-domestic customers, particularly SMEs and microbusinesses. For the investigation period, the CMA reports that gas prices to SMEs rose by 11%. This was lower than the price-hike experienced by domestic consumers (27%); however, it is clear that suppliers are squeezing non-domestics for higher profit. EBIT margins for the SME sector were on average 8.6% compared to 3.3% for domestic consumers. Significantly for gas-buyers, the margin applied to gas prices was 2% higher than the margin for electricity.
Worryingly for ‘less engaged’ or smaller businesses, the report found that there were significant price variations depending on the contract type. Rollover gas contracts were, on average, 28% higher than retention contracts – and even more significantly – ‘deemed’ gas contracts were 24% higher than rollovers. For under-resourced microbusinesses this is particularly problematic. A massive 9% of microbusinesses were on deemed contracts as well as a further 23% on rollover contracts in 2013.
Small businesses losing out in the gas market
In cooperation with third parties including; Ofgem, The Federation of Small Businesses and Citizens Advice the CMA expressed three other concerns faced by business energy buyers:
- Microbusinesses may face barriers to engaging in retail energy markets – similar to those faced by domestic customers
- With negotiated contracts and lack of price publication – the non-doemstic market is non-transparent
- Energy brokers may not be operating effectively or fairly
Overall, this report suggests that it is the smallest businesses who suffer the most in the current energy market. Their size makes them unable to leverage the largest suppliers for better prices, and cowboy brokers are unwilling to locate them a fair contract. On top of this, their relative lack of resources means that many small businesses struggle to manage energy contracts and often, they get stuck on a rollover contract at a much higher rate.
Business Gas.com specialise in offering favourable rates to smaller businesses. Our fixed and flexible priced contracts are perfect for small operations – and our gas buying group allows smaller businesses to band together in order to gain more leverage over the energy market.
Later this month Ed Davey, the Energy and Climate Change Secretary, will launch a new campaign urging customers to shop around for the best deal on their energy supply.
The new energy switching drive will come weeks after the Which? consumer group reported that the ‘Big Six’ energy firms hadn’t cut their prices in line with broader wholesale costs. Which? executive director Richard Lloyd said: “Our analysis places a massive question mark over how suppliers have been setting prices over the last two years.”
The Uncompetitive UK Energy Market
The report found that although smaller firms were offering more competitive rates, these firms are unable to exert pressure on the largest providers because businesses and consumers are reluctant to change their energy provider.
For a competitive marketplace to flourish, businesses and individuals need to be fluid between the cheapest suppliers. However, many purchasers are reluctant to change providers because they aren’t sure where to get the best deals, or they think switching will involve lots of hassle, or simply because they don’t know how to switch.
Last month Mr Davey claimed the Government had “introduced more competition in the energy market and made it much quicker for people to switch energy supplier”.
“Industry is delivering on my challenge so now my challenge is for more consumers to take advantage. There’s never been a better time to shop around, switch and save money faster than ever before,” he said.
By softening the barriers between suppliers, the Government has injected some life back into the energy market. But there is still more to be done. Business purchasers need to become more energy-aware. It is hoped this new campaign will make the switching process clearer – so customers can see how easy it really is.
Customers Can Make Energy Competitive Again
We need a broader attitudinal shift towards energy customer pro-activity. Nobody should wait around for the hegemonic ‘Big Six’ to gradually reduce their prices as and when they feel like it – instead they should get out and seek a better deal elsewhere. Business energy users could save by making conscious and smart purchasing decisions.
At Business Gas.com, we work hard with our customers to secure the best deal for everyone. Get in touch today to find the perfect energy deal for your business.
Time is ticking for your business to comply with the Government’s Energy Savings Opportunity Scheme (ESOS). Businesses which qualify for the scheme are obligated to carry out audits, identify efficiency savings and file reports with a lead assessor no later than December 5th 2015. There is a lot to do in less than a year.
What is ESOS?
Administered by the Environment Agency, ESOS is the UK government’s response to parts of the EU Energy Efficiency Directive. Effectively, the scheme serves to turn this EU directive into British law –making it mandatory rather than optional.
ESOS obligates qualifying organisations to assess their total energy consumption and pass the results on to the Environment Agency every four years, with the first year being 2015. Total energy consumption applies to all buildings, processes and transport used by the organisation. If your business does not have detailed breakdowns of all of this consumption then an audit will need to be carried out over a 12 month period.
The scheme is designed to help businesses identify areas where energy consumption could be reduced or made more efficient. Although organisations are under no obligation to actually carry out the efficiency-savings, we believe that many firms will identify some lucrative cost savings that will benefit both the environment and the company balance sheets.
Will my business qualify for ESOS?
The basic qualification for ESOS compliance is large organisations. This will mainly apply to businesses but will also include some not-for-profit and non-public-sector bodies.
ESOS qualifying organisations will either:
- Employ 250 or more people.
- Employ less than 250 people but have an annual turnover in excess of €50M, and an annual balance sheet total in excess of €43M.
Make sure you are ESOS compliant
There are some important considerations that ESOS qualifying organisations will need to make to make sure they reach the standard of compliance.
- Monitor your consumption at all levels of the organisation. This means at different sites as well as in transport activities and industrial processes.
- When trying to identify potential savings look for particularly high levels of consumption or for sites which are operating particularly efficiently and ask what they are doing differently.
- Make sure you appoint a lead assessor to approve your work. Although the bulk of the assessment can be carried out by a suitably qualified individual within the organisation, you will need an accredited lead assessor to approve your compliance.
While at times ESOS compliance may feel like an exercise in bureaucratic hoop-jumping, it is important to remembers that there is real scope for the this scheme to save businesses money on their consumption.
In the UK, the Government expects that ESOS could lead to about £1.6 billion in savings. The Carbon Trust meanwhile believes the savings could be as much as three times that amount.
If you would like further advice on complying with the ESOS regulations call a team member on: 0800 157 7175
Our expert advisors are used to handling questions about our Gas Buying Group. Below, we’ve tried to answer some of the questions that we get asked most often.
What is a Gas Buying Group?
A gas buying group is an amalgamation of businesses with the purpose of negotiating cheaper gas prices through purchasing collectively. Approved group members team up to buy gas in greater volumes – at the best possible price.
Do I Fit The Bill?
To qualify for our larger buying group your business needs to use a minimum of 100,000kwh of gas per year. This can be split across multiple sites, as long as the total consumption of all sites is above 100,000kwh. We also have a smaller gas buying group for businesses that do not meet the 100,000kwh threshold.
Am I Under Any Kind of Obligation?
If our offer to you is less than 7.5% cheaper than your current rate then you are under no obligation to accept, so there’s nothing to lose.
What if My Current Contract Ends in June?
The buying group contract ends on the 30th September each year. However, if your existing contract with another supplier ends at any other time, we can offer you a short term contract that will expire at the send of September – so you can still enjoy the benefits of buying in bulk.
How do I Join the Buying Group?
To join the Business Gas buying group just speak to one of our advisors on 0800 1577 175 and they will handle all of the admin work. Once you’re in, the day-to-day management of the contract is minimal.
Is it free to Join?
Yes!
What about Something to Sweeten the Deal?
When you sign up we’ll give you a gas smart meter AND a full years daily online reporting AND a bill validation system – all for free!
So let me get this straight, I’ll get a better price on my gas, a brand new ‘smart’ gas meter and a free gas logger and all I have to do is pick up the phone?
AND the more we buy, the cheaper it gets!
If you’re interested in joining our buying group and making fantastic savings on yout business gas, call us now on 0800 157 7175!
Thousands of restaurants across the length and breadth of the UK are missing out on favourable rates on their gas prices. Whether an individual or part of a chain, every restaurateur stands to benefit from dramatically reduced gas prices simply by collecting more detailed information on their gas consumption. This can be easily achieved by using gas loggers and smart meters to dramatically lower a restaurant’s energy bills.
Contrary to popular opinion, gas prices fluctuate between peak and off-peak rates just like electricity. However, gas suppliers only receive information on annual consumption data from the National Grid. This means that no matter what time the gas is being used, most consumers are paying the same rate based on their annual consumption – and not enjoying cheaper rates based on the time of their consumption.
This is problematic for restaurants because they tend to operate on atypical gas consumption schedules. Although restaurants carry out the bulk of their operations outside of peak hours (i.e. at meal times) they do not enjoy off-peak gas rates if they are being charged a flat annual rate. By not recording more detailed data about their gas consumption they are missing out on huge potential savings.
Record your gas usage
The only way to benefit from these lower prices is to record your usage levels frequently over a suitable period of time. And then send this information onto your gas supplier to negotiate a fairer rate.
In the past this was made very difficult as there was no reliable method for monitoring and recording the data besides sending somebody to check the meter every hour. Now, however, technologies like smart meters and gas loggers mean that restaurants can get accurate information about their consumption and automatically send it to the gas provider.
Aside from the obvious advantage of allowing restaurants to negotiate a better rate on their gas, there are some less obvious benefits of keeping collecting information on your restaurant’s gas usage.
No more estimated bills
Another advantage of recording usage information is that bills will no longer be estimated. When bills are estimated there is no way of finding out if you have used the gas that you are being charged for. However, if you send information directly to your gas provider there is an iron clad guarantee that you are being charged fairly.
By recording all of the information about gas usage, restaurants can also take steps to reduce their consumption. By monitoring hourly usage over an extended period, a restaurant will be able to locate areas in which they are using gas inefficiently. For example, if gas is being used out of hours, it might be that heating is being left on overnight.
Business Gas.com has helped lots of restaurants get a better deal on their business gas. To find out more, give us a call on 0800 157 7175.
Wholesale energy prices have only been going in one direction recently, downwards. As large oil producing nations Russia and Iraq post record breaking levels of output, energy supplier’s costs have tumbled. These savings though, have not yet been passed onto consumers in the form of lower prices. There are signs, however, that frugal energy shoppers can find better prices on their energy.
This week, politicians from across the political spectrum have been investigating why energy bills are not decreasing alongside supply costs. The price of a barrel of Brent Crude oil dropped below the significant $50 benchmark earlier this month sparking fresh demand for lower prices. The Chancellor, George Osborne launched a Treasury investigation into whether firms are passing on the benefits to consumers of plunging oil and gas prices.
Likewise, the leader of the opposition, Ed Miliband called for new Ofgem regulatory powers to ensure ‘immediate relief’ for consumers. In a BBC interview Mr Miliband proclaimed “We see wholesale costs go down 20% in gas prices over the last year and no reduction in bills.”
So far though, neither party has been successful in securing a better deal for energy users.
Get a better gas deal
There are signs though, that by shopping around, energy customers can find a better deal. Much of the political rhetoric about prices is targeted at the ‘big-six’ firms who typically, are the slowest to react when wholesale costs fall. This is because they tend to buy up large reserves of oil and gas at higher prices, meaning that it takes longer for their prices to fall.
Smaller suppliers, who carry lower reserves, should theoretically be quicker to pass savings on to consumers. This might be taken as one of the reasons that independent suppliers have managed to increase their market share from negligible up to 8% in recent years.
While larger suppliers continue to snub politicians and their calls for customer price cuts, there is already evidence to show that independent suppliers are reacting to reduced supply-side costs with lower prices.
At BusinessGas.com, we help save businesses money on their energy bills by working with a wide range of gas suppliers. Moreopver, by working the gas markets to our (and your) advantage. And if you use a large amount of gas, you may be elegible to join our buying group.
We are now in the grips of the coldest months of the year. For the restaurant trade, this is often the very time when punters want to come in out of the cold, and warm their souls with some comfort food and a glass of something nice. Equally, though, the enivoronment needs to feel warm and welcoming. And keeping the non-cooking part of the restaurant warm takes money.
If you’re looking for ways to keep the bills down, there are ideas to help you do that and here at Business Gas.com, we thought we’d run through some of these below. In the process we might also debunk some fairly serious winter myths. And we’re not talking about the one about the fat man and the chimney.
Seal the windows
First off, we’re looking at keeping whatever heat there is, in the restaurant. It is true that a lot of heat escapes through the windows, so check these first. Of course replacing windows with double-glazed, draft-proof ones would be ideal, but not all independent restaurants have pockets deep enough for that, particularly in January. However, you can check for gaps and hold your hand up to feel where the cold air is coming in. Then seal those up!
Manage your thermostats
Two things here. Firstly, if your heating system has a programmable thermostat, make sure you do program it to come on and off, and at the right temperature for the season, to make sure it’s working as efficiently as possible (and do be realistic about when you really need to heat the place). More modern systems can do a lot of the thinking for you, but older thermostats will need some instruction. Secondly, if the thermostat is not programmable, still give yourself the time off from taking orders to go and set it manually, in tune for the winter season.
A good benchmark number is 68 degrees for when the premises are in use. However, each degree you turn it down will equate to a 1% saving on your bills. Another word of advice – don’t leave the heating on low, but constantly, thinking that is more efficient. It’s not. And don’t turn it right up first thing in the morning, thinking it will heat the place quicker… that will also lead to higher bills!
A warming fireplace
Following on with the theme of heating, if you’re a pub or a rustic country restaurant has an open fire, you have a built-in route to energy saving… and one your customers will love. Yes you need to pay for the firewood, but then nature handles the rest. Aside from the incredible heat they kick out, the aesthetics are pure Christmas card: the smell, the sounds of crackling wood, the look of it.
Get a better deal on your gas
At the end of the day,we all rely on our central heating and whilst following our frugal tips is common sense, it needn’t mean abandoing the heating system entirely. At Business Gas.com, we are able to secure the best gas deals for your restaurant. Through our knowledge of the gas markets and group buying power, our gas prices are highly likely to be lower than what you’re spending now.
Why not try our gas calculator to see what you could have saved in 2014?
As consumers, we operate in a marketplace driven by cost pressures. That is especially true at Christmas. Black Friday bore witness to the willingness in human beings to clamber all over one another, just to find a bargain. Equally, the relatively new online culture means we now let our fingers do the legwork (if you see what I mean), finding the best prices for whatever it is we’re looking to purchase.
A website such as Kelkoo will scout the market for the best prices for most electronic devices and that kind of aggregating of cost carries over into the business energy market… although not, of course, stretching to anything like the chaos of Black Friday. In a domestic context we are well versed in the art of ‘switching’ – of shopping around for the most competitive supplier of energy. The same is true of the business energy marketplace, although there are, perhaps, one or two extra things you need to bear in mind.
The bottom line is that gas suppliers are, themselves, a business, serving other businesses, and the prime motivator for everyone is to make money. Bearing that in mind, if you simply let your contract run down, and then renew, it is highly unlikely your supplier will be at all motivated to help you save money. It’s business. If they can make an extra 10 or 20% from your contract, they will do that.
Always push for a better deal
The first thing, therefore, is always to push back and ask for a deal on rates. Even then, the supplier will look to offer you the best price they can get away with offering you. Many businesses will be happy with any kind of reduction, viewing it as a victory when, in reality they might have been able to push for much more. For example, if you’re paying 2.95 pence per kwh and negotiate 2.65p, you may well see that as a successful negotiation. In reality, the supplier may well have dropped to 2.35p per kwh… and still made money.
For many, however, such negotiations are labour intensive, requiring the kind of specialist knowledge they simply don’t possess. Equally, many businesses don’t have the time, and really need someone to take on the research, and negotiations, on their behalf. That’s where a broker like BusinessGas.com comes in.
Look at the bigger picture
When you contact one of our consultants you will, of course be looking for more competitive rates than you are currently on. But sometimes it’s not as simple as it may seem. For example, in a recent case one of our pricing team scoured the market on behalf of a client who used 518.941 Kwh of electricity per annum. One supplier offered a price of 3.986p per Kwh with no standing charge; another, 2.31p per Kwh but with a standing charge of £5.86 per day. At first glance the standing charge might, at face value, look prohibitive. However an expert in the market will be able to calculate that at that level of annual usage, the saving on the price per Kwh will actually still amount to £6,556.88 each year. And that can be a hefty amount to many businesses.
And that is why trusting the decision to BusinessGas.com means putting your business in the hands of the professionals, who know the sector, know the marketplace and can quickly do the sums.
And, in turn, that frees you up to spend time on other crucial aspects of your business… such as the finishing touches to the staff Christmas do! And with these savings, you can even keep the Christmas lights on…
You will, no doubt, have read the stories – and seen the news – about the worrying, worsening crisis in Crimea. This strategically important region – currently part of the Ukraine – has pitted the political wills of the West against those of Russia, in a stand-off rarely seen since the icy chills of the Cold War. However, there is another, more business-oriented aspect to this conflict… and it might have an impact on your business. Energy.
Russia is Europe’s largest supplier of natural gas, oil and coal… all of which are essential for heating and powering homes and businesses here in the UK. We are now is a situation where Russia is the source of 25% of the gas requirement in Europe. 50% of that goes through Ukraine. So what might be the impact of Russia deciding to turn off the tap? Well, it wouldn’t be the first time. Back in 2009 Russia turned off the supply to the Ukraine, arguing that the country had been tapping into supplies meant for Europe. In that instance, the shortage quickly spread across the continent and had an upward effect on energy prices.
Does your present gas contract end between December and May? If so, the chances are you will be renewing your gas contract in October or early next year – in other words, Winter.
Why is that significant? It’s still not common knowledge but if you negotiate your business gas contract in the colder months, you could be paying significantly more than if you negotiated in the summer months.
The weather can have a huge impact on gas prices. And it’s logical when you think about it. When you come in from work at night, unless it’s already on, the first thing you do is fire up the boiler. Likewise, first thing in the morning, we all like to wake up to a nice toasty house (if you’re anything like me, it’s tricky getting out of bed otherwise!) so the heating’s set to come on early. If you work from home, or are retired, the chances are its on for the majority of the day.
More importantly, if you’re a business, it could be on for very long periods, ensuring your workforce are comfortable and likewise your customers.