Total Gas & Power
Industry View from
Energising your business
When juggling multiple tasks, serving customers and developing the business, finding the ideal energy supplier rarely ranks at the top of the priority list for any small business.
Ofgem, the UK’s gas and electricity regulator, published a report in 2018 which found that more than two-thirds of small businesses had gathered prices from energy suppliers, and half of those either switched supplier or negotiated a better price with their current one. This is great news for all small business owners, as it shows that navigating your way through the energy market doesn’t have to be as daunting as you might think.
Switching suppliers because you’re offered an attractive incentive may seem like the right thing to do. However, understanding the product you’re being offered and the overall costs you’ll be charged during the course of the contract is more important. Affordability is critical, as is understanding the price you’re paying for your energy and all that comes with it, such as metering costs and taxes.
Other aspects to consider include understanding the terms of your energy contract and what that means to you and your business, knowing when you’ll receive your invoice, and the turnaround times for answering your queries.
The rollout of smart meters, that automatically measure the amount of gas or electricity your business is using and send readings directly to your supplier, is the first step towards enabling the industry to manage energy flows throughout the day. Businesses that understand their peak energy usage periods can adjust their consumption, which in turn can lead to them lowering their energy consumption and costs.
As director for small business at Total Gas & Power, Peter McLeod explains: “If a small business owner wants a smart meter, they should ask for one! Why wait? Business energy, specifically gas and electricity, is not as complicated as many small businesses think. My advice is to treat energy suppliers as you would any other supplier – know what you want as well as what you don’t want, and only agree to a contract once you understand it.
“It’s vital to be clear about the price you’re paying and what it means in terms of monthly or annual costs for your business. Some suppliers will offer one rolled-up price. This means other associated charges for your supply, such as meter-related charges (standing charges) are included in the price of your energy. This is the pence per kilowatt hour, which is the price you pay for every unit of energy your business uses. The unit price is a clear driver in what you’ll spend, but don’t forget, the cheapest unit of energy is the one that you don’t use.
“Other suppliers will separate out the standing charge costs into a price per day. It’s important that you understand what this means in terms of monthly outgoings as you’re effectively dealing with two separate costs that will appear on your gas or electricity bill. Ask your supplier to help you calculate these costs. Knowing the overall monthly expenditure is often more meaningful for small business.
“Small businesses are my passion, as is helping them to thrive. I see it as my responsibility to demystify energy for them and help them to make a decision that is right for their business”.
Fixed prices offer protection against price rises during the contract term, but if energy market prices increase, the business may need to prepare themselves for price rises when their contract comes to an end.
Peter McLeod continues: “Running a successful business and increasing the bottom line is important for creating success but also for paying for life’s pleasures. This might be days out, meals with family and friends and long-awaited holidays. Any decision a small business owner makes can impact their bottom line and therefore their ability to invest in their business or spend time enjoying life outside of work.
“Some businesses prefer to work with an energy broker or use a price comparison website, many of which offer valuable services that can help ensure peace of mind.
There are two elements that are common between us all – small businesses, brokers, comparison websites and suppliers – and that’s our desire to help others while making money.
“For businesses who prefer to work with a broker or comparison website, my advice is to be clear about the capacity in which the broker is working on your behalf – and how much you’re paying for their services. Some will separate out their charges while others will include their fee in the unit rate or daily standing charge. These elements may not be highlighted on your invoice, so if you already use a broker and you’re unsure what you’ve been charged, ask them or speak to your supplier. Make it your business to understand.”
Whichever approach is right for your business, don’t be rushed into a decision. Whether you choose to deal directly with suppliers or appoint a broker, take time to understand the product and the terms of contract.
Assure yourself that the supplier meets your requirements, whether that be regular communication on future price impacts, sourcing of green gas and electricity or support with the latest energy saving technology.
Remember: the right energy supplier is the one that works with you.
To find out more about how Total Gas & Power can help you and your business, visit connect.totalgp.com/sme