Businesses overpaying on energy by not switching
The Competition and Markets Authority (CMA) announced plans in 2016 to reform the business energy market. Key areas for action are more price transparency, the ending of auto-rollover contracts and giving businesses more prompts to switch that include allowing rival energy suppliers to contact those on the most expensive tariffsSean Davies, Gocompare.com
How can we help you with your business energy needs today?
Utility bills are likely to be a major outgoing for your firm, yet many business owners get stuck in a cycle of auto-renewal of energy-supply contracts that may be costing them thousands of pounds.
If you've never switched or you stick with the same supplier for a long time, the likelihood is that you'll have moved towards the most expensive of their tariffs and you're potentially paying far more than you need to.
Domestic energy users are increasingly familiar with this pattern, but the percentage differences paid by business customers may be even more extreme.
Looking around for a better deal that could save money is easy with Gocompare.com and our partners Make It Cheaper who offer a personalised, independent and impartial service to help you find the right option. They will:
- Guide you through the switching process
- Advise on any action that needs to be taken
- Provide a direct phone number to an adviser who can field your questions
- Offer a free, no-obligation comparison of all business gas and electric suppliers
How do I compare and switch business energy?
- Find a recent bill
- Click 'Continue' above and you'll be presented with the option to either phone Make it Cheaper or request a callback
- You'll be quoted the best rates over the phone and by email
- If you choose to proceed, Make it Cheaper will organise the contract with your new supplier
- The switch over to the new contract should take four-to-six weeks
- There'll be no paperwork and no disruption to your supply
The potential savings could be significant, as indicated by the Competition and Markets Authority (CMA) which is trying to reform the business energy market.
In its provisional decisions announced in March 2016, it said that - in a better functioning market - microbusiness customers of the 'big six' suppliers could have saved £230m a year in each of the financial years between 2007 and 2014, cutting each firm's energy costs by an average of 6% a year.
The 'big six' of EDF Energy, E.On, SSE, Centrica, Scottish Power and RWE Npower control the vast majority of the market, but you should compare your options with each of them and remember that there are alternative, smaller firms that could potentially offer better deals and service.
It's the customers who end up doing nothing that we're probably most upset about because doing nothing means you'll get done
Jonathan Elliott, Make It Cheaper
The CMA has suggested that part of the reason for business customers overpaying is because the 'big six' suppliers inherited millions of so-called 'sticky' customers when the energy industry was privatised in the 1990s.
Many of these customers have never shopped around and have consequently been left on the most expensive tariffs.
The most attractive prices are typically found with 'acquisition tariffs' - which are available to switchers opting to fix their supply for a year or more - while the most expensive are typically applied to 'out of contract' rates where businesses have never actively looked at their energy supply contract.
Plans for reform include more price transparency, the ending of auto-rollover contracts and giving businesses more prompts to switch. This will include allowing energy suppliers to contact a rivals customer when that customer is those on a default contract (which typically means the most expensive tariff).
"It's the customers who end up doing nothing that we're probably most upset about because doing nothing means you'll get done," said Jonathan Elliott of Make It Cheaper.
"The energy companies need to publish their variable prices and get rid of the 30-day notice period they ask for before a switch. You can actually switch in three days so it's crackers they're asking for 30 days."
You can find out more by reading our business gas and electricity guides, where you'll also find the answers to frequently asked questions.
Our guides offer more information on key areas of business energy bills such as rollover contracts, 28-day contracts, deemed rates, the Climate Change Levy (CCL) and the factors affecting the utility rates paid by your business.
You can also read more about making the sort of green business choices that could lead to both environmental and economic benefits.