Why do businesses save money when they switch energy provider?
With the rise of smart meters in homes across the UK, many families are getting more savvy about their energy.
But while domestic properties are getting better at shopping around, businesses are struggling to keep up. An independent study conducted by Utilita revealed that less than half of businesses review their energy prices once a year, and 20% only review theirs every 2 to 5 years.
Most concerning of all was that one in 10 businesses never shop around for a better deal.
If more businesses knew how much they stand to gain by switching, these figures would look drastically different. Below, we break down exactly why you can save money when you switch your energy provider — and how it could be easier than you think.
How business contracts work
To understand how you save when you switch, you first need to understand a little bit about how business energy contracts work.
As standard, business energy contracts work on a 1, 2, 3, 4 and 5 year contract. Like domestic contracts, your rates can be fixed (where you pay the same price per unit of energy used for the full duration of the contract) or variable (prices for energy fluctuate depending on the market).
However, unlike domestic contracts, you can’t simply switch in the middle of a business contract. This is because of the way that energy is bought by different providers. Though domestic providers buy energy on a monthly basis, business suppliers buy gas and electricity in bulk — usually enough to cover the length of a contract. That means if you choose to leave early, there’s a lot of energy left unused. For that reason, it’s trickier to switch in the middle of a business energy contract than a domestic one.
Instead, the best opportunity to switch is in your ‘renewal window’, a period of time before your contract ends (usually between 1 and 6 months). This is the perfect time to shop around, compare prices against your current supplier’s renewal quote, and setup your new agreement ready in time for when your contract ends.
How you save by switching
Here are our top 3 examples on how businesses save when they switch to a better tariff:
You avoid the price hikes that normally accompany a rolled-over contract. Though your initial deal with a provider might have been a steal, it’s unlikely that they’ll repeat it the second time around. Many providers reserve the best prices for new customers, rather than rewarding customer loyalty, so it makes sense to see what deals are available to you. This means you could switch to a provider who is cheaper or find a better deal with your existing supplier.
Switching helps you avoid ‘deemed contracts’. A deemed contract is a tariff that comes into play when there’s no contract in place between you and a provider. For example, you could be placed on a deemed contract if you have moved into new premises and are using the existing energy supply or if your contract has been terminated but you are still using the energy supply. Prices on deemed contracts are are, on average, 80% higher than rates charged in a negotiated contract, so make sure you look for a better deal today and begin the switching process.
Switching lets you take advantage of fluctuations in the business energy market. Because prices can be different from one day to the next, you can get a better rate for your entire fixed-rate contract simply by switching at the right time. By monitoring the market when your renewal is due, you’ll spot those great deals so you can strike while the iron is hot.
When all the above falls into play, you could save thousands of pounds a year, depending on the size of your business. Suddenly, your margins have a little more breathing room — perhaps enough to make the difference and propel your business forward.
Why you need a comparison service
Knowing how to get the best deal is always good for your business. But if you’re navigating that switch by yourself, there’s one thing it does cost: time. That’s not good news when today’s businesses are more time-poor than ever: the Utilita study found that 59% of UK SMEs struggled to shop around for the best energy deals due to time constraints.
Thankfully, this is where Love Energy Savings can help. We work on your behalf to negotiate the best quotes from dozens of different provider, turning what you thought would be weeks of hard work into a single decision for you to make in seconds. All you need to do is choose the one you think is best.
Our operators speed things up by handling the following challenges on your behalf:
Each quote is bespoke — Once we know a little more about your business location and usage habits, we can generate bespoke quotes for you and collate them on your behalf.
There is no ‘dual fuel’ with business energy — Whereas you can buy both gas and electricity in one contract with a domestic provider, business energy providers operate on single-fuel tariffs only. That means there’s twice as many quotes you need to get. We will compile these quotes for you to make your decision simple.
By doing the hard work for you, we give you your time back while ensuring you still save money on your energy bills.
Want to see how much you could be saving on your business energy? All you’ll need is your business postcode to get started — it really is that easy.