Your energy bill consists of two main elements, namely contract rates and consumption data. In order to keep your business’ energy costs as low as possible, you should prioritise getting cheap contract rates and aim to use energy as efficiently as possible.
In this guide, we’ll outline two steps that will help you obtain cheaper business energy bills, providing top tips for both.
Step One: Get the Cheapest Tariffs
Your aim on your contract is simple; to lower your annual invoices. Almost all tariffs have two elements, the unit rate and a daily standing charge.
Cost vary by each electricity company, so comparing prices is essential. Whatever your situation, it’s important to get new quotes and switch gas and electricity tariffs when your contract expires.
Comparing prices is uncomplicated and takes less than one minute to enter your details to get a pricing quote. Here are our top tips for getting the lowest prices:
1. Check Your Total Quote
Don’t be fixated on reducing only the unit rate per kWh. Some tariffs have low unit prices, but with high standing charges. Therefore, compare the overall annual cost of your bill rather than individual rates.
2. Know Your Contract End Point
All business energy contracts require formal termination so you’ll need to monitor the end dates and terminate it in time when the terms allow.
This process prevents your contract from rolling over into prices that could be 75%-85% higher depending on your provider. 61% of businesses don’t change their supplier at the end of a contract, which typically results in excessively high bills.
3. Search the Market Each Year for Prices
Tender or get quotes annually from all the main six energy suppliers for electric, gas, and dual fuel tariffs. Dual fuel tariffs may not be cheaper for all companies so you should obtain all three quotes per supplier.
4. Check With Your Current Supplier
When you have all the quotes, even from a broker, ask your current supplier to beat the lowest price. In most cases, you’ll be offered additional discounts to stay.
5. Don’t Miss Out on Additional Discounts
Pay your bills by fixed monthly Direct Debit to receive additional discounts. These reductions can be between 2% and 5% depending on the provider.
6. Try a Broker
Consider hiring an energy broker who has a deeper knowledge of the industry and the types of contracts transacted each month. They often have specially negotiated rates that can beat suppliers’ direct prices.
7. Use Referrals
Speak with your colleagues to see which supplier they use for their energy and ask them what they’re paying. Although regional pricing means businesses in the North of the UK often pay 8% higher than those in the South, using a trusted supplier from a recommendation lowers the risk of expensive rates.
8. Group Buying Power
Consider pooling your purchasing power with other businesses in your area, then approach the energy suppliers as a group to see if you can obtain further discounts.
Some brokers offer this type of group buying service to many hundreds of customers to leverage the purchasing power.
9. Fix for a Longer Term
Once you have the best prices, consider a longer-term agreement if you believe prices will rise.
The longest fixed-rate contracts are usually for five years, which are on average 12% higher than a one-year term. Prices negotiated today at these levels will not rise or fall if the wholesale market pricing changes.
Fixing your contract for more than one year could help with long-term budgeting and cash flow management.
10. Get Other Services Bundled
Ask to receive additional services from your supplier. You can access specialist energy managers and management software to help you reduce your consumption or smart meters to monitor and analyse your usage.
Most suppliers provide these free of charge, but you have to ask to receive them.
Bonus tip: Consider Green Tariffs
By choosing a green 100% renewable tariff, you’ll get an exemption from the Climate Change Levy. Although the prices for these tariffs are usually higher than standard charges, your carbon offset requirements will be zero. You may be able to negotiate reasonable prices for renewable fuel contracts; just speak with your energy supplier or broker.
Step Two: Improve Energy Efficiency
Using less energy is the second key step to reducing your annual bills.
Although some information in this guide may seem obvious, it’s still worth implementing. Surveys and research undertaken in this area suggest that at least 10% savings in consumption are possible by implementing these changes in your organisation.
The average business on average tariff rates would save over £220 each year. Here are our top 10 tips:
1. Utilise Renewable Energy Sources
Consider investing in renewable energy sources such as solar panels or wind turbines. You could receive payments for the electricity generated and exported to the National Grid via the Smart Export Guarantee (SEG) scheme as well as reap the benefits of not purchasing traditional fuels.
2. Make Use of Industry Expertise
Make full use of the free expert advisors your energy company provides. They all provide access to professionals who can audit your business while suggesting ways to reduce energy consumption.
3. Upgrade to a Smart Meter
Install a smart meter and data collection system together with energy monitors. Most UK businesses are not on this type of meter but can upgrade for free. The meters allow access to usage data on a regular basis so you can monitor peak load times. This data allows you to make adjustments to how you use energy and reduce long-term consumption.
4. Introduce Energy Efficient Lighting
Consider changing all light bulbs to the energy efficient equivalent (such as LEDs or CFLs). The cost of these units has drastically reduced in recent years, and the quality of light produced is in line with traditional bulbs. The energy usage is almost negligible and could save hundreds, if not thousands of pounds per year.
5. Integrate Changes with Staff
Promote best practice with staff and customers by encouraging them to turn off appliances such as lights and IT equipment when not in use. This simple but effective measure is an easy win for efficiency in your organisation.
6. Opt for Grade A+ Appliances
When replacing old appliances, always select grade A+ efficient models to reduce energy consumption. Advanced manufacturing standards and EU directives mean most equipment receive a high classification. All equipment will show how effective they are on the product energy labels.
As with residential properties, consider investing in double glazing or insulation in walls to keep the heat in and the cold out during the winter months.
8. Manage Temperature Controls
Turn down thermostats by a couple of degrees if possible and ensure that they’re working correctly. Modern digital thermostats are the most reliable and easiest to operate.
9. Replace Inefficient Equipment
Consider changing high energy consumption equipment for the low energy equivalent. For example, ink jet printers use 90% less energy than laser jet printers, and the quality is almost the same. Laptop computers use 82% less energy than their desktop equivalent.
10. Timing Helps Efficiency
Consider installing timers for heating and cooling systems so that they are turned off when there is no one on the premises, but able to switch back on at the right times.
Many of the energy efficiency measures will require a lifestyle change for most people and staff. In order for them to work effectively, they need to be communicated internally with management support.
Perhaps communicate data from your energy consumption reports each week so that everyone is aware of the consumption in the business. Additionally, targeting improvements together with reward systems where savings are passed back to the employees could be help to improve engagement. Ultimately, making a few changes to your business energy usage and negotiating down prices can have a huge effect on the costs of your annual bills.
Try our free tariff comparison tool today to find the best energy deal for your business.
Cheaper Electricity and Gas FAQs
What types of tariffs are available?
To suit the needs of various businesses, there are different types of energy tariffs. The two main types of business energy tariffs are:
- Fixed rate – This kind of tariff involves monthly payments at a fixed price, regardless of whether market prices increase or decrease. Contracts on fixed rate tariffs can last between one and five years.
- Variable rate – Unlike with fixed tariffs, your payments will not be the same every month as they will be affected by market activity. Therefore, fluctuations can occur and impact the amount you pay.
When is electricity cheaper?
Evenings and weekends are typically deemed as off-peak times for energy use. If your business primarily functions during these times, you may be able to get cheaper electricity rates with an off-peak business electricity tariff.
What are the benefits of switching supplier?
The main benefit of switching energy suppliers is the potential savings that can be made.
If you haven’t changed gas and electricity suppliers in a while it is likely that you’ll be able to get cheaper rates with another supplier. Getting a cheaper deal can provide you with peace of mind in knowing that you are on a suitable deal and you aren’t overpaying for your business energy.
Other benefits include potentially better customer service from your new supplier and also the possibility of your new supplier providing you with benefits that weren’t available to you on your previous contract; for example, smart meter installation or multi-site tariff options.
When is the best time to switch?
The best time to switch energy suppliers is when your current contract is due to end, during your renewal window. Changing suppliers any earlier could cause you to incur early exit costs.
It’s important for you to know when your current contract is up for renewal, as your supplier could place you on a more expensive contract if you fail to switch in time.