Electricity bills can be a significant source of expenditure for small businesses - especially those in energy intensive industries. Yet while every business needs electricity in order to operate, what they don’t need is to pay too much for it.
Unfortunately, many businesses in the UK are unwittingly paying over the odds for their electricity, largely due to a lack of engagement when it comes to renewing their contracts. The good news is there’s a simple way to ensure that your business isn’t paying more than necessary to keep the power on.
Business Electricity Costs
First, it's useful to have an understanding of the way that your business’s electricity bill is calculated. This knowledge can help you to identify a good deal when it comes to arranging a new electricity contract for your business.
There are two basic costs that contribute significantly to the overall cost of your electricity bill:
Standing charge - This is a fixed daily rate that you will pay regardless of how much electricity you use. Small businesses can usually expect to pay a standing charge of around 25 pence per day.
Unit rate - This is the price of each unit of electricity that you use. An average price per unit for a small business is about 11 pence per kilowatt-hour (kWh).
Different suppliers will offer different prices for standing charges and unit rates, which is why it’s important for small business owners to shop around to ensure they’re getting a fair price for their electricity.
Business Electricity Contracts
In the business energy world, gas and electricity are always contracted separately, although both contracts can be with the same supplier. Contracts cannot be cancelled once arranged, and typically last between one and four years.
While you're unable to exit a commercial electricity contract before its agreed end date (unless you move to new premises), you can arrange a new, better-value deal when you have six months or less remaining on your current contract. This new deal will begin when your existing contract ends.
However, it's important to note that you shouldn't leave it too late - your current supplier will need a minimum of 30 days' notice that you're switching to a new deal, so you'll need to act when there's more than one month remaining on your current contract. If you miss this cut-off point, you'll find yourself on your supplier's more expensive rates until you arrange a new deal and give your supplier the necessary notice.
The Dangers of not Switching
Arranging a new business electricity contract may initially seem like a complicated process, but the reality is that it can be quick and easy if you use a trusted broker - indeed, the cost of not switching will be a far bigger drain on your time and money than spending ten minutes on the phone arranging a better deal.
If you do not arrange a new electricity contract before your current deal expires, then you will automatically be rolled over onto your supplier's ‘out of contract’ rates. These are inflated rates and can increase your electricity bill by as much as 30% - a hike which many small businesses may not be able to afford.
The FSB has carefully selected a trusted business energy broker for its members, who you can call on to ensure that you’re getting a fair deal for your business electricity. Talk to one of their saving experts to get a quote for a better energy contract and avoid being inadvertently placed on expensive rates.
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To see how much you can save, call:
0800 035 3819