Managing Electricity Prices for Small Businesses
We all know that if you are managing a corporation or larger business then you generally have more buying power and for business energy prices this is all too true as figures released show.
The average electricity prices for small businesses showed an increase of between 15% and 17% between the 3rd quarter of 2009 over 2008 based on figures recently released by the forum of private business owners whereas larger businesses the figures were between 9% and 11% and the large PLCs who have the biggest buying power showed a much smaller increase of around 5%.
With business gas figures the gaps were even more pronounced with larger businesses seeing a drop in their prices of between 14% and a massive 52% and small business owners actually seeing an average increase of around 8%. Over the past month or so most of the energy companies have reduced their gas prices for domestic customers and these will likely flow through to business users soon, but because most businesses are on fixed priced and fixed term contracts they won’t be able to take advantage of these price reductions any time soon.
Whilst ofgem announced some restbite for micro businesses with their contract clauses so that they don’t automatically get rolled over into another year of fixed prices at the same levels of pricing or even higher these are only for new contracts and doesn’t really address the issue of higher pricing.
It’s also likely that due to various investments and the ever changing wholesale market that prices will have to again increase later this year and for small business owners that’s only going to add to the turmoil of attempting to manage costs and improve profits.
What small businesses can do is to check the terms of any energy contract they may have and ensure that they know when their business electricity pricing and gas tariffs are due for renewal and ensure that they get new quotes before they have to communicate a termination of their contract. Business owners can get online quotes from all the major energy companies via their websites or use the services of a specialist energy broker who can often get better deals and know how to negotiate prices with the energy suppliers.
The one thing small businesses shouldn’t do is to allow their contracts to roll over automatically and the old style of working for micro and smaller businesses is to have a fixed period of time when you can notify that you want to switch suppliers and have to provide that in writing. New contracts going forward have different terms due to the changes made by ofgem but these are only for new contracts started this year.
So if you want to save on your electricity prices for small businesses then check your contract terms for the period to switch, get new quotes either directly from the utility providers yourself or via a broker and attempt to negotiate the prices down. All new contracts will be for at least a year and have some form of fixed pricing associated with them. This is a great way to reduce costs in your business.
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