How to lower your energy costs when looking for a new small business tariff
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 and get a quote. The prices suppliers will show you will always be the cheapest business energy quotes they can give you. For example, EDF 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 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 to 90 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 around 1 to 3 years
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 wont need to pay an exit fee if you want to leave or change tariff
Still unsure? Read our blog dedicated to helping you choose the right tariff for your small business
If you’re looking to switch, make sure you’ve cleared any outstanding balance before the end of your contract as 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.
To get a fair comparison you must make your calculation on your actual consumption and total costs. To do this you need to compare combined unit rates and standing charges. A zero standing charge tariff may sound good, but often unit rates are higher to recoup those costs.
Unsure about the difference between standing charges and unit rates? Watch our video where one of our energy experts explains the difference.
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 has a handy guide to CCL and VAT if you want to find out more.
Factor in types of tariff, discounts and extra charges
Some suppliers, including EDF, 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, most energy suppliers will have a direct customer service number to provide assistance.
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, with access to tools and dashboard to give you control over your energy usage.
Step 5: Get off a deemed tariff
If you’ve just moved property, typically, standing charges for owner occupier tariffs across the industry are more expensive than a fixed tariff. This is common so suppliers can reduce risk with an unknown customer. Therefore, it’s best to find the right fixed tariff for your business if you move into a property, or even move to a variable option, until you decide.
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 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.