Taking the power back
In the wake of a sluggish economy, rising energy costs are an expense that businesses and property owners simply can’t afford. As Phil McCabe explains, they shouldn’t have to either
With many commercial property owners struggling in the worst economic upheaval for at least a generation controlling energy costs has become a top priority.
The Forum of Private Business (FPB), among others, is campaigning to bring down the spiralling cost of utilities and end the practice of small firms being tied in to expensive ‘rollover’ contracts with little or
The campaign has led to the energy regulator Ofgem announcing several measures to protect small firms from the activities of energy companies and create transparency in the market.
Now, energy companies must ensure their business customers are aware of any contract changes and give them a minimum of 30 days notification to switch to another supplier. They also prohibit unjustified price differences between tariffs and payment types and give firms more flexibility to switch suppliers.
But average prices remain high. Figures published by the Department of Energy and Climate Change show that average electricity prices for small and medium sized firms increased by 15 to 17 percent between the third quarter of 2008 and the same period of 2009. Prices increased by nine to 11 percent for large businesses and by just five percent for the UK’s biggest companies. Further, average non-domestic gas prices went up by eight percent for the smallest businesses but fell by between 14 and 52 percent for all other commercial customers.
The data comes amid widespread criticisms of energy companies for not passing on cuts in wholesale energy costs to domestic customers.
Recent research carried out by the FPB shows that the impact of over-inflated energy prices is also being felt by businesses. More than 84 percent of respondents cited rising utilities costs as a ‘major concern’.
Business owners do not have to face the energy giants alone. FPB now works in partnership with utilities consultancy Utility Options, who help businesses to switch suppliers in order to cut their bills. It also provides advice and information on how businesses can reduce their energy costs.
Whether negotiating their own deals or using Utility Options, commercial property owners need to make sure they are able to make informed choices. Before entering any agreement businesses should know the price per unit they are expected to pay – and if there are any other less obvious charges. They should also ask if their rate is likely to change at any point, how they will be informed of this, how long the contract is and how they will informed that the renewal
date is approaching.
It is advisable to find out what will happen at the end of the contract – will it automatically ‘roll over’ into another fixed term? Businesses should find out what they should do if they want to terminate their contract early or switch to another supplier.
Other questions should include does the agreement involve committing to a certain volume of energy use? Where
is more information on the terms and conditions of the contract? Under what circumstances could the energy supply be cut off and what notification will be received?
Finally, they should ask about payment options so to choose the best one for their businesses. Adopting this approach means small businesses can guard against unpleasant surprises further down the line that could see them paying far more than they have to.
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