How to lower your small business energy costs
A pro's guide to taking the hustle out of getting the best small business gas and electricity prices
Getting the best energy deal for your business isn't as challenging as you may think. Here's our handy five-step guide to sorting your business' energy contract like a pro. Quickly. And simply.
Step 1: Get the cheapest energy price for your small business – go online
For some time now, new regulations have meant that all energy suppliers must publish their best business gas and electricity prices online. So, you no longer need to have lengthy negotiations with each supplier, wasting time and your own energy, to get to their best small business energy prices.
Now, all you need to do is go online. The prices suppliers will show you will always be the cheapest business energy quotes they can give you. For example, EDF Energy will always offer its best prices to customers who come to them directly for a quote.
What's more, although prices still vary from supplier to supplier, it’s easy to compare prices if you know what you’re looking for. Read on, and we'll tell you what you need to be looking for.
Step 2: Choose the tariff that works best for you and your small business
Don't be overwhelmed by all the small business tariffs out there. We can explain them to you so you can choose between them. Broadly, they fit into two camps: fixed or flexible (also called variable). Here’s what you need to know:
Fixed
Most small business customers choose fixed-term tariffs because they usually offer the best prices and they are guaranteed for the duration of the contract.
- Your small business gas and electricity prices per unit stays the same for the term of your contract, making it easy for you to budget
- Check your emails and post – if you’re on a fixed-term contract, suppliers will usually write to you around 60 days before your contract ends to let you know your renewal offer
- You’re protected from price rises as the market fluctuates
- But you do need to be able to commit to a long-term contract
Flexible
Small business customers who can’t commit to a fixed-term contract tend to go for a flexible one. Prices can be higher, but there’s less pressure to commit to a long term.
- You might find this useful if you've just opened your business, you're moving to new premises soon, or you're just not comfortable committing to a longer-term contract
- Your energy price per unit will rise and fall with demand on the market
- You’re generally able to end your contract by giving 30 days’ notice
If you’re looking to switch, make sure you’ve given at least 30 days’ notice before the end of your contract and cleared any outstanding balance – this should allow you to switch as soon as your contract ends
Step 3: Compare the real costs of each business energy quote
Once you know what type of tariff you need, it’s time to get some quotes and compare them. Before you start, it’s best to get an up-to-date meter reading so you can get the most accurate quotes.
Whatever you do, don’t make your decision based on the annual estimate alone. When giving you an annual estimate, different suppliers may include or exclude different costs. The real trick is to compare small business energy prices like-for-like. To do this, here are three cost areas you'll want to look at.
Ensure that fixed really is fixed – check the flexibility of the non-energy costs (sometimes called pass through costs) such as Feed in Tariff Levy (FiT) or Capacity Market charges
If, like most small businesses, you opt for a fixed contract, be sure to check the conditions around non-energy costs. Some suppliers don’t fully fix this cost and you could end up with extra charges mid-way through your contract.
Know what’s included or not – check the Climate Change Levy (CCL) and VAT
Some suppliers don’t include these in their quote because certain businesses and organisations (for example charities or some businesses based in a residence) are entitled to exemptions or partial exemptions. So be sure to adjust your comparison of the total costs to compare like-for-like. EDF Energy has a handy guide to CCL and VAT if you want to find out more.
Factor in discounts and extra charges
Some suppliers, including EDF Energy, offer discounts for paying by monthly Direct Debit. This can be an easy way to shave a few pounds off your bill.
On the flip side, some suppliers may charge you a premium for paying by cash or cheque, so always account for this in your small business energy plan.
Step 4: Make sure you get the service you need
Not all energy suppliers offer the same levels of customer service or online tools to help you manage your energy account. And as you know, time is money – and you may not want to waste yours. So decide what help you'd like to have to hand, and what you can do without, then factor this into your comparisons.
It's easy to dismiss service when you've found a low price. But so you don't regret your decision later on, here are some questions to ask yourself now:
Does the supplier make it easy for me to manage my account?
Some suppliers enable you to manage your account online or by using an app. This can save you hours across the year waiting in calling queues.
Can I get help from customer services when I need it most?
Check what times the suppliers’ call centers are open.
Are there any extra ways the supplier will help me save?
A good supplier will also help you use less energy and spend less money on your energy bill, helping to reduce your overall small business energy costs. They’ll give you comprehensive guidance to use less.
Discover more ways to cut your small business energy bills.
Step 5: Get in early to save your small business money
If energy prices are on the rise, as they have been over the last year, it might pay to line up your next contract up to six months before your current one ends.
Make sure to keep your account up to date with regular meter reads to ensure you’re only paying for what you use and avoid building up potential debt.
Compare energy prices for small businesses early. If you see an offer that works for you, you can usually accept it there and then. Of course, you’ll still have to wait six months before your current contract's up, but you’ll likely lock in a lower price than if you wait.
Handy tip: If you’d like a no-obligation reminder that you've got six months left on your current energy contract, you can give EDF Energy your email address and renewal date and you'll get a timely nudge.
There you have it. Our five-step guide to sorting your small business' energy contract like a pro. No hustle. No hassle.