Ofgem Gas Security of Supply Seminar: the future of gas in the UK
Business week in brief: 3rd February 2012
Energy is the second biggest risk to medium-sized businesses, says npower
FSB asks energy suppliers to treat SMEs equally
The Federation of Small Businesses (FSB) has called on energy suppliers to treat SMEs more like domestic energy customers.
The Federation is pushing for greater transparency from the so-called ‘Big Six’ energy suppliers, simpler pricing and for SMEs to get the same protections as domestic energy customers.
The FSB’s recent ‘How’s Business?’ survey in the north-east found that 80% of those polled were worried about rises in business electricity and gas prices.
It also revealed that some small businesses feel that they have limited knowledge when it comes to the options their business has for energy, and very few feel that they understand energy contracts.
Ted Salmon, FSB North East Regional Chairman, commented: "In our most recent survey of members the biggest barrier for their business was increased energy and fuel costs.
"We want the energy companies to pass on the recently announced bill reductions to small and micro businesses. Given that small and micro businesses typically behave like domestic customers in the energy market they should be treated in an equal fashion.
"Alongside this the government should be doing more to help small and microbusinesses by ensuring there is greater transparency of the big six providers and introducing a more transparent pricing structure.
"Small and microbusinesses will help lead the recovery and re-balancing of the economy in the North East and by pushing through these changes will help more to survive, grow and prosper."
Do you agree with the FSB? How would you like to see the business energy market change for small businesses?
Big Energy Week...for businesses
This week is Big Energy Week, an initiative from Citizen’s Advice that’s designed to get people thinking about how they can cut their energy bills at home.
Chris Huhne at the Big Energy week stand in Westfield. Image by DECCgovuk via Flickr.
Naturally, we think that gas and electricity bills at work are just as important as those at home, so I’ve put together three golden rules that I think will help you get a better deal on business energy:
1. Know when your contract ends. It’s vital that you know when your contract is due to end so you’re ready to do something about it in good time. If you ignore your contract end date, you can be rolled-over onto a new contract automatically, and it might not be the best deal for your business.
2. Get an overview on the market. Don’t accept the first price you’re offered and don’t go direct to a business energy supplier when it’s time to renegotiate your contract. Go to a broker (like uSwitchforBusiness) and you’ll get prices from a range of suppliers so you can be confident that the deal you sign up for is competitive.
3. Use less energy. It doesn’t make business sense to use more energy than you need to. Whatever the nature or size of your business, there’s advice (and maybe even a grant) to help you become more energy-efficient. The Carbon Trust is great starting-point.
I’ve also put together a short reading list of guides that explain more about business energy and how you can make sure you get the best value for money:
- Business energy bills - there are more options than you might think when it comes to billing.
- Business electricity prices and business gas prices - how to find the best business energy prices.
- Business electricity meters and gas meters - the different types of business meter explained.
- Business energy regulators - who are the regulators and what can they do for you?
- The Carbon Reduction Commitment - what does it mean for your business?
For more information on business energy contracts visit our partner company Business Juice.
Energy price decreases: what’s a business to do?
With domestic energy prices falling, James Constant takes a look at the options and opportunities for business energy customers.
It’s that time again: domestic customers are getting the ‘benefit’ of price drops; energy suppliers are hogging the headlines; ministers are getting tetchy; consumer groups are banging the drum…but what of the wealth generators, the business energy customers?
No price drops?
If you think that, you couldn’t be more wrong. Bear with me whilst I shed some light on the murky workings of the energy market.
‘Market’ is an important word. Energy, be it gas or electricity, is traded on the wholesale market, and like any trading activity, it sets a price payable against a volume available.
The concept of ‘supply and demand’ drives the price; the more there is and the less demand, the lower the price, as someone can always shop elsewhere so the price needs to be keen. When supply is limited and demand is high, the price is driven up, as other options are scarce.
Add in the ‘global complex’ of energy, where the issue of one country affects another thousands of miles away (Whether that’s an earthquake in Japan that knocks out nuclear and means it has to be replaced with LNG, which in turn means LNG imports have to be being diverted away from their Western European destinations, or the fragility of the Middle East affecting confidence in supply and driving trading in commodities to higher prices, or even nearer to home, the interconnector between Britain and France sending fuel to the continent to capitalise on higher market prices while causing a supply constraint in the UK.) the issue is compounded.
And then there's the UK itself: aging, creaking power stations with reliability issues, uncertain weather leading to freak conditions of winter summers and summer winters and generators withdrawing capacity from the market - sometimes justifiably, sometimes questionably.
So all in all, before you take into account the commercial considerations of suppliers (or margin as it is more commonly known) there is a natural volatility in energy markets for which the user bears the cost, whether they’re business or domestic.
But it’s not all bad news. We’ve all seen the adverts with the important warning ‘markets can go up as well as down’ and that’s where the business energy opportunity comes in.
If the market has fallen enough for suppliers to bring down domestic prices, you can bet that the market generally has been on a downward movement for some time.
Why? Well, for domestic customers it is the protocol of suppliers to make as few price changes as possible. (It doesn’t always feel like that of course from the blanket media coverage of consumer energy costs.) As a result, a domestic supplier change will come after a prolonged period of market movement (up or down) which will enable a greater level of certainty for the supplier on where the market is ‘at’, where it is going and how to make a profit.
So if a domestic customer is getting lower prices the market WILL be at a lower level than in recent history and that’s the buying opportunity for a business energy customer.
Not only that, but the flexibility of the price and deal is much greater for a business customer than a domestic one, whether you’re a corner shop or a multi-national, there's a deal to be done.
So what’s stopping you? If you don’t know your contract end date then call your supplier now and find it out as a matter of priority. Alternatively call a reputable broker (I know one I would recommend!) and they will get the information for you and be able to guide you through when best to grasp the falling market opportunity and how best to do it. (Naturally they will do all the hard work for you.)
A couple of pointers:
1. If the market moves down excessively then it could pay to extract yourself from your existing contract and agree a new lower rate one. Always contact your broker before engaging in this exercise though.
2. Despite everything I have said, a falling market isn’t the only buying opportunity. In fact, given that the energy market trades on a half hourly basis, there are 48 price windows a day and a myriad of contract lengths that will drive ‘volatility’ in the market. ‘Volatility’ is the second key word after ‘market’.Prices do not move upwards or downwards smoothly, rather they move up and down like stalagmites and stalactites, so even in a down period there's a movement upwards and vice versa.
Impossible? Not at all
A hassle you don’t need? Let someone else do the hard work for you!
Once you’ve taken the opportunity you’ll not let it drop again, apart from the price that is.
Give our expert business enegy advisors a call on 0800 688 8568.
EDF cuts domestic energy prices, but why do business energy prices work differently?
You may have seen that EDF has announced a price decrease for its domestic customers. It's the third energy supplier to do so; Co-operative and Ovo have already announced their price decreases.
Depending on how much attention you pay to the ins and outs of the energy market, you might also have seen these charts from Consumer Focus:
They show the difference between the wholesale price that the energy suppliers pay for gas and electricity, and the price the customer pays.
As you can see, when wholesale prices go down, this saving isn't passed onto the customer immediately.
Many commentators have suggested that this is unfair, and energy suppliers have come under a lot of pressure to cut their prices in recent months because wholesale prices have been going down.
Business energy prices work differently.
Firstly, most business energy contracts are fixed - so when you're locked into your contract, your prices stay the same. with domestic energy, most customers are on variable tariffs that can rise and fall as the supplier sees fit.
Secondly, business electricity prices and business gas prices are far more volatile, they change almost every day. This is because - unlike the domestic market - business energy isn’t bought in advance, it’s bought as and when new contracts come in. This means that the wholesale market has a huge and almost immediate impact on business energy prices.
This is worth bearing in mind when you're nearing the end of your contract - if you give our business energy advisors a call, they can give you an indication of what trends we're seeing in business energy prices. You can lock in a new contract four months before your existing contract ends too, which can give you a real advantage when it comes to securing the best price.
We're currently seeing a downward trend in pricing, so now's a great time to give us a call and discuss your business' needs (0800 688 8568).
Engage your employees and save £6000 on your bill, says the Carbon Trust
A new tool which helps engage your employees in energy efficiency could save you 15% or £6000 on your business energy bill, according to the Carbon Trust.
With a new online tool called Carbon Trust Empower, an individual employee could cut 220kg CO2 a year - for larger businesses, the Carbon Trust estimates that this could lead to savings of as much as £150,000 a year.
Carbon Trust Empower lets employees explore different ways of saving energy, whether at their desk, at the printer, in reception, the kitchen, the corridors and even the toilets.
It creates and tracks personal action plans, and enables office managers to view their employees’ individual energy savings.
Richard Rugg, Director of Carbon Trust Programmes, said: “Companies often struggle to harness the huge energy savings that an effectively engaged workforce can help deliver. Part of the problem employers face is making actions practical, fun and sustained. By creating a virtual tour entirely from an employee’s viewpoint, every aspect of Empower has been designed with the end-user in mind. Employees are a critical ally in cutting energy waste. Get them onboard and reap the rewards in lower bills and reduced carbon emissions.”
Whitbread and Oxford City Council have already signed their staff up to the scheme.
Chris George, Head of Energy & Environment at Whitbread, commented: “Whitbread has a clear target to reduce carbon dioxide emissions by 26% by 2020. To get there we have embedded sustainability into the heart of our business and we are working closely with our teams and business partners to reduce energy and water consumption. We believe that Empower is a strong learning platform which will help our teams to understand how we can work together to reduce energy consumption within our portfolio of buildings in the UK. It is a straightforward and user-friendly tool, which is easily accessible online and may lead to tonnes of CO2 emissions being saved across our business. It also demonstrates that as we save energy, we also save money, bringing real commercial benefits to the bottom line.”
Meanwhile Paul Robinson, Team Leader, Energy and Climate Change at Oxford City Council, said: "Oxford City Council is committed to tackling climate change, and engaging and empowering employees is a critical way for us to make significant carbon and financial savings. The new Empower tool is great fun to use and we intend to roll this out to all our staff in the near future as part of our commitment to reduce our operational carbon emissions by 28% by the end of March 2012, relative to the 05/06 baseline emissions. We will also encourage our Low Carbon Oxford partners to use it with their staff too."
Business energy prices: electricity down, gas up
Industrial electricity prices are down but industrial gas prices are up, according to the latest Energy Trends report from DECC.
Average industrial gas prices, including the Climate Change Levy (CCL) were 17.9% higher in real terms in Q3 2011 than they were in Q3 2010. If you exclude the CCL, prices were 17.7% higher.
Meanwhile, average industrial electricity prices decreased for the same period. Compared to Q3 2010, electricity prices including CCL were 1.5% lower and 1.7% lower excluding CCL.
The report also revealed how industrial energy prices in the UK compare to those elsewhere in Europe. From January to June 2011, prices for industrial electricity consumers (including taxes) were above the EU15 median for extra large and large business energy users, equal to the median for medium users, and below the median for small users. (The EU15 consists of Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal, Spain, Sweden and the United Kingdom.) And while industrial gas prices may have risen, they were still the lowest in the EU15 for all sizes of business, including and excluding tax.
Find out more about how business electricity prices and business gas prices read our guides, or give our energy advisors a call on 0800 688 8568 to see how the business energy prices you pay measure up.
Our top blog posts of 2011
- The draft Energy Bill: a five-minute summary
- 60% increase in business energy costs as average turnover falls by 6%
- Business week in brief: 11th May 2012
- Ed Miliband and the Queen talk energy
- Interview with Steve Fitzsimons of new business energy supplier, Hudson Energy
- Business week in brief: 4th May 2012
- The see saw of corporate profit
- Business week in brief: 27th April 2012
- EDF Energy’s Business Customer Commitments: four key pledges
- Businesses buck the trend when it comes to smaller energy suppliers