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.
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.
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.
The Internet of Things (IoT) has a great deal of potential to generate change in society. Devices and appliances, or ‘things’, which can detect change via sensors and then communicate this information over the Internet are seen as real technology game changers.
As time goes on the electronics and sensors needed to make this happen will be becoming cheaper and cheaper and many experts believe that by 2025 IoT will have fundamentally altered the way we live and do business.
The energy industry is one of the areas expected to undergo the most significant change; commentators expect significant cuts to business energy costs.
More visibility
The IoT is a difficult concept, especially if you are trying to work out the advantage of a toaster being connected to the internet.
The advantage normally lies in a greater degree of visibility. Devices such as smart phones, boilers and weather vanes which are connected to the Internet will be able to communicate with manufacturers, operators and other connected devices. They will ‘talk’ about the weather, movements and a whole host of other inputs to communicate a clear picture of the world automatically.
The added visibility will give either you or the manufacturer the ability to make smarter decisions and better products.
Smart gas meters across the internet
Smart meters are already widely available and, though it is a relatively young IoT technology, it has a great capacity to moderate energy demand and reduce costs.
A smart gas or electricity meter will communicate consumption data directly to the energy supplier and to you.
This can generate two cost saving benefits. Firstly, because the meter can communicate directly with the supplier, it means you will always get an accurate reading on your energy bill and will avoid overpaying or receiving the dreaded estimated bills.
Secondly, because the information is communicated directly to you through a real-time online reporting system, it means that you can monitor your consumption more closely. This can empower you to alter your usage patterns, identify areas of waste and reduce demand.
The smart metering roll out can be supplemented with dynamic ‘time of use’ which will reflect variable costs of generation. In this way, businesses which can purchase energy flexibly, for example by running high energy processes at night time, stand to save if they use smart meters effectively.
This will also help deliver a more stable energy system by moderating demand so as to ensure a more constant flow of energy, rather than jumpy production.
The future of the Internet of Things – a smarter supply side
The Internet of Things will also increase the potential for intelligent supply-side management.
Smart grids operated on the Internet of Things will allow distribution to be managed in real time rather than relying on historical patterns of use or the gut feelings of network operators.
They are starting to be used on electricity networks, monitoring the spread of energy as it travels from plant to end-user, and hold a number of benefits to society. Chief among the benefits is that they generate efficiencies.
Electricity is difficult to store so, unless there is immediate demand, it will be wasted. Smart grids will seek to perfectly balance the supply and demand of the electricity network, ensuring that waste is kept to a minimum and consequently reducing the price paid by households and businesses.
Smart grid projects do exist but are relatively small scale so far. Projects like the Glasgow Future City and Pecan Street in Texas show how utilities can be delivered efficiently on a small scale; national smart grid systems might still be some way off.
To find out more about Business Gas.com smart meter solutions click here or read more about online gas reporting here. Alternatively, talk to one of our advisers on 0800 157 7175.
Business Gas.com has published a new guide to purchasing gas for small and medium size businesses. This guide is designed for business leaders and owner managers who want to reduce their energy expenditure and protect their bottom line against market shocks.
It is packed with practical tips and actionable advice related to developing an energy purchasing strategy and particularly, buying gas on a fixed-price contract.
Click here to download the gas buying guide.
National and international gas markets are volatile and shaped by a complicated myriad of factors. If you approach the gas market without a strategy then it is easy to buy at the wrong time and lose control of your energy costs.
The advice is targeted towards businesses which use between 32,000 kWh and 120,000 kWh of gas annually, but many of the lessons are applicable to anyone involved in the purchasing of energy.
Above all the guide is designed to be accessible and it assumes no prior knowledge on behalf of the reader. But it really can give you the knowledge to secure cheaper gas rates for your company.
Paul Rafis, Head of Gas Procurement at Business Gas.com, said: “business leaders will be familiar with the headache which energy purchasing can cause. This guide makes it simple.
“We’ve designed a guide that is both comprehensive and accessible. Among other things it will teach you how to evaluate your gas needs, purchase effectively and most importantly reduce your gas bills.”
This guide explains:
- Different ways to understand the energy market
- How to develop a coherent energy buying strategy
- How to evaluate your gas needs
- How to effectively purchase gas at a fixed-price
- Alternative methods of buying gas for small and medium-sized firms
- How to practically reduce your gas bills
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.
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…