Small Business Electricity
Have you finally opened your own small business, after years of planning and hard work? More and more people in the UK are becoming entrepreneurs and opening small businesses. In 2007 alone, over 557,000 new small businesses were opened (Startups), with the UK total number of small businesses now over 4.7 million. (Federation of Small Businesses)
But after finally achieving their dream, many small business owners are struggling with rising electricity and energy costs. It is estimated that approximately 50% of the UK’s small and medium businesses will have their annual energy contracts up for renewal in October and should be considering that now. It is also expected that those contracts will cost them 110% over what they paid last year.(Times Online)
Is small business electricity different form consumer electricity?
Yes, a business customer differs from a domestic customer for electricity suppliers’ purposes. For one thing, business energy contracts are binding and have no cooling-off period. They also have much tougher guidelines for non-payment. While your home electricity supplier may send you several notices and eventually file a CCJ against you, “Business energy suppliers have a special legal right to cut-off premises when a customer does not pay them…They can go to court to get a warrant to enter the premises and physically disconnect you.” (Energy Advice Line)
In addition, business customers have an extra line on their bills for CCL charges, which stands for Climate Change Levy and goes toward reducing greenhouse emissions. This money does not go the electricity company, but is sent to the government. Your VAT will also generally be charged at the standard 17.5% rate, rather than the 5% domestic consumers pay. (Electricity4business) And of course, the contracts are much more detailed. A supply contract is required for all businesses.
How do business electricity contracts work?
Although there are several types of business energy contract, the most prevalent is the “evergreen” or automatically renewing contract. This contract may be originally for a period of 1 to 5 years, and they will automatically be renewed unless you send them a termination notice during a specified “renewal period”. The renewal period may be several months before the contract actually expires and may be for as short as one week. (Times Online)
Unfortunately, electricity suppliers do not make this easy for customers to understand. Most business electric contracts are quite complex. A 2008 survey of small businesses found that only 20% know when their energy contracts were renewable and 51% admitted they had never read all the fine print in their contracts to understand them. Redvers Griffiths, energy consultant at GET Solutions, notes “Many small businesses are spending a great deal on their energy bills because they simply do not have the time or understanding of how to get a better deal.” (Act Smart)
The problem with this type of contracts, in addition to their complexity, is that generally when a contract automatically renews, the price goes up, to a standard ‘default’ rate, which can in some cases be a 100% increase. And once you’ve missed the renewal date, there’s really nothing you can do about it. “Previous inertia is replaced by sheer panic when the customer suddenly learns that the electricity bill is doubling and the evergreen contract prevents him from switching to a far more reasonable rate from a competitor.” (Electricity4business)
Can you switch business electricity suppliers?
Yes and it is becoming more common to do so in the face of steadily climbing prices. It is estimated that up to 300,000 small businesses will switch energy suppliers in 2008. (Energy Choices)
While not quite as simple as switching home electricity providers, switching business electricity provides doesn’t have to be difficult. The most important thing to remember is that if you have a contract with a renewal period, you must terminate your current service within that time.
Once you have notified your current provider of your intent to terminate, you can use one of the free energy comparison and switching services, such as Electricty 4 Business, Energy Advice Line or Businesswitch. These sites are specifically targeted for business customers, although some of the other comparison services may also have information on electricity suppliers for businesses.
How do I switch my business electricity supplier?
Once you have compared the rate from your current supplier, decided to switch and terminated your current service, you can compare available rates through an online site. You will generally need certain information to help the service find the best supplier for your needs. You will need to have at hand:
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Complete address information of the business
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The Meter Point Administration Number or MPNA
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Name of current supplier and contract end date
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The average annual amount of electricity used (Energy Advice Line)
Most of this information can be found on a current bill. You may also in some cases need to enter information as to how you plan to pay. Generally, choosing direct debit on a monthly basis will result in the lowest rates. Submit your information to the comparison service and generally within a few seconds, it will display suppliers available in your area. Simply review the offers available and click the supplier you choose. In most cases, the new supplier will contact your previous supplier for details and you will have a new and more affordable electricity supplier within four to six weeks.
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