Business Energy? Seriously? Yawn...
We know business energy isn’t the most interesting topic in the world. Switching energy supplier isn’t what gets anybody out of bed in the morning. But it’s important. And it’s not as complicated as the energy industry has tried to make out. So we’re going to break it down, honestly, into simple stages…
How do businesses buy energy?
It’s quite different to how you do it at home.
|Domestic Energy||Business Energy|
|You have a rolling contract with no end date||You have set contracts (typically for 1, 2 or 3 years)|
|Prices can go up at anytime (also down, in theory!)||Prices are locked-in for the life of the contract (which helps with business planning)|
|You can switch basically whenever you want||You can only switch at the end of a contract|
|As long as your cat is warm she’ll be happy||This is a chance to impress the boss with how savvy you are|
Why should I switch energy supplier?
You’ll get much better savings than if you negotiate with your current supplier.
Don’t play the negotiation game
What many business customers do is wait to get a renewal letter from their current supplier, offering a new contract. It will nearly always be a lot higher than than what they were paying previously (the supplier is hoping they don’t notice). Then they telephone their current supplier to haggle, when the supplier will inevitably back down and make a lower offer much closer to what they were paying previously. This little charade means that those businesses are not totally getting ripped off. However it also means that they are not getting the best price in the market; just what their old supplier thinks they can get away with.
If you want to pay the best price, then you need to switch.
Also, while a good price is critical, you might also find a new supplier with better customer service, a great website, more accurate bills, and who offers clean or renewable power. Believe it or not there are new modern suppliers who do offer those things!
Is it risky to switch?
There is zero risk of being disconnected, and a modern supplier will keep you informed.
You won’t get unplugged
Lots of people think that your old supplier needs to come and unplug your meter, or even dig up your cables. And that the new supplier needs to turn up at the same time to plug their power in. All that actually happens is, on the date your contract changes, various energy industry computer systems are updated behind the scenes to make sure the right company sends you a bill in the future.
It takes 21 days or less
By law you must be switched over in 21 days, but modern suppliers will try and do it in less.
Make sure you’re not left in the dark
If you’re switching between old fashioned suppliers, there can be a bit of a black hole of communication. But switch to a modern supplier, and their customer service will keep you informed throughout.
When can I switch?
You can only switch at the end of your current contract, and you’ll need to give your current supplier notice at the right time.
You can only switch at the end of your contract
In fact you probably can break your contract, but you’ll have to pay high cancellation charges that make it not worth bothering. If you’ve found a good new deal, you have to give your current supplier notice that you will switch away from them at the end of your contract.
Try and give notice as soon as you can in your ‘switching window’
If you have a 90 day notice period, try and give them notice 90 days from the end date of your contract. If you have a 60 days notice period, give notice at -60 days. And so on. Larger businesses can only give notice within this switching window. Look at your current contract, renewal letter or bill to find out your notice period.
Unless you’re a micro business; then you can give notice whenever you want!
You are a micro business if:
- You have fewer than 10 full-time employees and an annual turnover or balance sheet of less than €2 million (about £1.75 million)
- You use no more than 100,000 kWh of electricity per year
- You use no more than 293,000 kWh of gas per year
High Street businesses like hairdressers, shops and cafes are normally classed as micro businesses.
If you are a micro business then you only have to give 30 days notice, and you can give it at any point in your contract.
Read Squeaky's guide ‘Am I a micro business?’
What happens if my contract runs out?
You could be paying up to double, so try and get onto a new contract, fast!
You might get rolled onto a new contract
Your current supplier will have sent you a renewal offer. If you don’t respond to them, they may automatically roll you onto a new year-long contract at those offer rates.
Because old-school energy companies try to get away with charging existing customers more than market prices (and because you didn’t contact them to haggle) this could be quite a bad deal.
You might be charged deemed rates
Some suppliers may instead put you on ‘out of contract’ or 'deemed rates', which can be double the market price for energy. If this has happened to you, then you need to find a new supplier and switch as soon as possible! (You could sign a new contract with your old supplier, but why would you do that when they’ve treated you so badly?)
You may also go onto deemed rates for a few days if you don’t give enough notice to switch before the end of your contract. During the switchover you will still be getting power from your old provider, but not yet be in contract with your new supplier, so they’ll charge you out of contract rates for those days.
We’ve moved into a new premises
You’ll be getting power from the old tenant’s supplier, but on ‘deemed rates’ - so get a contract, quick!
Your priority is to get off deemed rates
If you’re being supplied by an energy company but don’t have a contract with them, they’ll be charging you 'deemed rates' AKA ‘out of contract’ rates. These can be double market prices, and you need to stop throwing this money away!
Look through your post
You should find a letter from the old tennant’s energy supplier. Give them a call and get a quote for a new contract.
Why not take the chance to find the best deal for you?
Moving into a new premises means you’re very busy, and the last thing you want to think about it energy. But it could be a major cost to your business, and now is a really good time to switch to the best deal. You’re going to have to sign a new contract with a supplier, so why not sign one with the best supplier for you?
How can I find the best energy deals?
The pros and cons of brokers, price comparison websites, and going direct.
|Ways to find deals||How they work||Pros||Cons|
|Brokers||Brokers charge a fee to compare the market on your behalf, which is folded into the price they quote you||This is what most businesses who switch supplier do. The broker does all the work for you. You can talk to a person to get reassurance||Brokers tend to only take suppliers’ prices into account. Some have unpopular practices, like auto-switching you again next year|
|Price comparison websites||Price comparison websites automatically give you quotes from several providers in the market. The new supplier pays them a commision when you switch||Some people like the control of ‘DIY’||There aren’t as many business comparison sites as there are for domestic. They don’t survey all the market, and many business energy providers aren't on their panel. They only take price into account|
|Going direct to suppliers||Energy suppliers by law have to provide an instant online quote tool. You can pick a few you like the look of and get prices||You can go direct to a big brand, and probably talk to someone in their call centre||You can choose to get quotes from specific suppliers that offer things that are important to you e.g. great customer service, renewable or clean energy|
What information do I need to get a business energy quote?
Just find your renewal offer or last monthly bill - everything you need should be in there.
By law energy companies have to give you a quote with just…
- Your business postcode
- Your recent electricity usage
- Your contract end date
It will make your quote more useful if you also supply…
How are business energy quotes calculated?
Most are set monthly. But you can find a better deal if they’re calculated using today’s live prices.
Most suppliers use a ‘price book’. That means they have a set price for businesses of your size in your postcode, which they’ll recalculate every month. This ‘averaging’ approach means that some businesses will be paying more than the true market price.
Old school energy suppliers will offer low prices to attract new customers. Typically they won’t make any profit from these contracts, but hope to claw it back with higher-than-market prices for renewals. This business model penalises customer loyalty. (Insurance companies typically use the same approach.)
Some modern energy suppliers like Squeaky instead calculate a personalised quote for you with that day’s ‘live’ prices. Their quotes are only valid for 24 hours, but you can refresh them whenever you want, and see how the market is moving. Modern suppliers also have better technology and lower costs, so they can give you a quote that is competitive for you but also sustainable for them, whether you are a new or existing customer. A much better way of doing business!
How can I tell if I've found a good energy deal?
Make sure you compare against the prices on your renewal offer, not what you’ve been paying!
Different suppliers may provide their quotes in different ways, so it can be difficult to compare them ‘like for like’.
- Suppliers have different daily standing charges, and some don’t have any (What’s a standing charge?)
- Suppliers have different prices per kWh (What’s a kWh?)
- You might choose to have different rates for day or night
- Your energy usage may vary considerably month to month or in different seasons
Find a recent bill
The best idea is to find a recent bill, and do a simple calculation to figure out what your new supplier would charge you for the same amount of days and energy.
Remember though, your bill will be based on the prices from your old contact that was signed 1, 2 or 3 years ago, and the wholesale price may have changed significantly.
Make sure you compare against the prices quoted in your current supplier’s renewal offer, not what they were charging you in the past.
Sign up and switch
Got a quote from a new supplier that you’re happy with? These are the steps you need to take to switch to them.
Terminate your old contract
If you have to give 90 days notice, make sure you inform them 90 days before the end of your contract. If it’s 60 days notice, do it at 60 days.
Sign your new contract
Modern suppliers do this online. Otherwise, dust off the fax machine!
Set-up payment for your new supplier
Some suppliers will send invoices, others use direct debit from your business bank account.
Wait for the switch to happen
Your old and new suppliers talk to each other and sort out billing periods and switchover dates. A good modern supplier will keep you informed too.
Do an opening meter reading
And then keep doing regular meter readings is the best way to avoid estimated bills.
Read Squeaky’s guide ‘Everything you need to know about energy meters’
Want more detail?
Take a look at this detailed timeline for switching to Squeaky.
A kilowatt hour (kWh) is a measure of how much energy you’re using. Honestly you’ don’t need to know more technical detail than that - as long as you know where to find out how many of them you used last year.
An MPAN is a Meter Point Administration Number - a unique 21 digit number for each of your business electricity meters. It might sometime be called something else, like an ‘electricity supply number’, but musn’t be confused with a ‘customer reference number’ or your ‘meter serial number’. Just look out for the 21 digits!
A Standing Charge is a bit like line rental on a phone contract. It’s the cost of having an electricity or gas supply – then you pay for the energy you actually use on top.
Deemed rates (also known as out of contract rates) can apply when you haven’t renewed your energy contract or switched supplier at the end of your contract period. Typically they are extortionate! It's important to know when your contract ends and it’s time to switch, otherwise you could be paying double for your electricity (ouch!).
Fixed rates are a type of electricity tariff that provide a locked-in rate for the energy you use throughout the length of your contract. Some suppliers just fix the kilowatt hour (kWh), but at Squeaky, we offer a ‘fixed fixed’ rate that doesn’t fluctuate at all – good news for budgeting and accounts.
Change of Tenancy (COT)
A Change of Tenancy means your business has moved, or is moving, into a new premise. It’s important to get the contract sorted as soon as possible to avoid going on to deemed rates with the current supplier. Moving premise is the perfect opportunity to shop around and find the best deal for your business.
Climate Change Levy (CCL)
The Climate Change Levy (CCL) is an environmental tax charged on the energy used by your business. You’ll be able to find this easily on your electricity bill in the price break down section.
Electricity distribution companies look after the grid; the infrastructure that gets electricity from the generator to your property. So cables, power boxes, etc. If a line falls in a storm, it is the energy distributor that’s responsible for fixing it, not the supplier. You cannot switch your electricity distributor - they own and operate their own networks.
Find your electricity distributor with this article who is my network operator.
Your energy supplier is the company that sends you your bill every month - this is what you can switch. They track your usage and calculate your bills, etc. The only hardware they are responsible for is your meter.
Half Hourly Meters
Businesses (like factories) that use a lot of electric have HH (half hourly) meters. As you might have guessed, a half hourly meter is an energy meter that monitors the amount of electricity used by a business within a half-hour period.
Non-Half Hourly Meters
But if you’re reading this, you probably don’t have a half hourly meter; you probably have an NHH (yes, you guessed it, non half hourly) meter which are read manually, or automatically with an advanced meter. It’s good to know, just in case someone asks.
A smart meter means you don’t need to read your meter as they allow you to review your usage and spend in real-time via a device fitted within your business premises. You might be offered one as part of your switch, but lots of people are preferring to wait until the next generation of meters have got over any teething problems.
An advanced meter allows for digital, remote meter reads so a supplier can monitor your consumption and give you an accurate bill each month. You might already have one but you don’t need to worry too much about them - they are getting phased out this year to make way for the snazzy new smart meters.
The majority of business owners have a standard meter – it’s pretty standard. This means you have to submit meter readings monthly or quarterly to your supplier. Sometimes they send an official meter reader round to do it for you.
If you don’t qualify as a micro business (see below), you must give your current provider notice of cancellation within this pre-defined time period, which typically starts 30-90 days before the end of your contract. This information should be on your bill; check with your supplier if it isn’t. Switching windows are a great chance to shop around for a better deal, so make a note of it in your calendar.
Micro businesses do not have to adhere to switching windows - they can give notice to their current supplier at any time and switch in 30 days, allowing for far more flexibility. If you spend less than £12,000 PA on electricity and/ or gas, and have a turnover of less than £2 million, there’s a strong chance you qualify. Check our guide below for more information.
Read Squeaky’s guide ‘Am I a micro business?’
Energy from renewable sources, i.e. that don’t take millions of years to replenish, as per fossil fuels. What’s often unclear is that renewable does not necessarily mean clean or eco-friendly. Many governments include burning biomass as a renewable source, which has myriad negative effects for both the environment, and public health. That’s why for our products, we prefer the more strictly defined…
The rate at which you pay for your energy. This typically appears as a letter on your bill; you’ll have to reference your suppliers website for what this translates to.
The letter you must provide your current supplier with in order to cancel your contract. We’ve made a template here. If you plan to send it by post, remember to use recorded delivery.
If you don’t submit regular meter readings your bills will be calculated by estimated use. This is typically based on previous years, or the usage of similar businesses. There are all kinds of issues with using estimates, so best to avoid if possible.
Dual fuels tariffs don’t really exist in business energy. Some suppliers might do you a deal to get both your electricity and gas business, but you will be buying two separate products. For the best prices it still pays to shop about.