Small, medium, large: average energy bills for different sizes of business
Ever wondered how your business energy bill compares to those of other companies of a similar size?
Use these charts to see what the average bill for similar size businesses is and how much you could save by switching. (We class a small business as one that uses 19,000 kWh or less of energy a year, a medium business as one that uses 19,001-50,000 kWh a year and a large one as one that uses over 50,001 kWh a year.)
As you can see from this chart, large businesses can make the biggest savings in cash terms - an average of over £1770. However, in terms of percentage savings, small businesses save the most - 24.77%, compared to 21.36% for medium and 19.70% for large businesses.
The following charts show how prices have changed over time for businesses of different sizes:
Here you can see the difference in the savings businesses make on gas and electricity:
Green Investment Bank: £100m for energy efficiency for businesses
The Department for Business Innovation and Skills (BIS) has announced what the next steps for the Green Investment Bank will be.
The Green Investment Bank is the world’s first investment bank to be dedicated to creating a greener economy.
The steps announced included a further £100 million investment in the non-domestic energy efficiency sector for the next financial year.
The other priorities for the Green Investment Bank are likely to be:
- offshore wind power generation,
- commercial and industrial waste processing and recycling,
- energy from waste generation,
- support for the Green Deal.
BIS also published the criteria which will be used to decide a location for the bank, with a view to a decision being made by the end of March.
Vince Cable commented: “There is a great opportunity for British businesses to lead the transition to a green economy and stake a claim on a sector that has massive potential for growth.
"I’m pleased to see that more than 20 places recognise the impact the Green Investment Bank could make, and are expressing an interest in being its home.
“I want to set up the Bank as soon as possible, so it can start accelerating investments in these key sectors and help British companies take advantage of these opportunities. Setting out the priorities for the Bank and establishing UK Green Investments for April 2012 are a major step forward."
For more information visit our partner company Business Juice.
Backbilling for microbusinesses: one year or three years?
Ofgem has suggested that backbilling for microbusinesses should be cut to one year, while energy supplier would like it to be three years.
In an open letter to Lawrence Slade of the Energy Retail Association and Gareth Evans of ICOSS, Sarah Harrison of Ofgem gave feedback on what enegy supplier are doing about the issue of backbilling for microbusinesses.
Backbilling is the practice of rebilling a customer when the supplier made a mistake on their business energy bill.
The Energy Retail Association and ICOSS have been working with consumer groups to come up with their own set of 'draft standards' on the issue.
In the letter, Ms Harrison said that Ofgem welcomed the constructive approach that was being taken and added that the development of minimum draft standards was ‘significant progress’.
However, one area where Ofgem seemed to challenge the draft standards was over the time limit on backbilling.
The draft standards say that suppliers will limit backbilling to three years “where a micro-business customer has taken all reasonable steps to avoid a back-bill”, while Ofgem has suggested that the limit should be one year. (Although the letter did state that Ofgem welcomed “any moves by suppliers towards this shorter time period”).
The letter also suggested that these draft standards should not be restricted to microbusinesses and should be applied more broadly for non-domestic customers.
Another interesting request from Ofgem was for suppliers to publish all the deatils on non-domestic backbilling cases "in the interests of transparency". They suggested that the information should be published on suppliers' websites and should include the number of back-bills issued over the previous year, the time limits associated for each of these and the overall cost of each bill to the customer - which could make for interesting reading.
For more information on backbilling visit our partner site Business Juice.
Cut your business’s electricity bill with energy-efficient lighting
Leaving a few lights on around the office now and again can’t make that much difference to your business electricity bill can it?
Well, according to the Carbon Trust, it really can.
According to it’s latest report, businesses in the UK could collectively save up to £700 million a year just by being more energy-efficient when it comes to lighting. That’s a lot of money (and carbon), so a few simple changes in behaviour, or installing some energy-efficient lighting technology could have a bit impact on your overheads.
Home retailer WJ Aldiss apparently made annual cost savings of an incredible £20,000 by replacing lighting in its shops and distribution centre. They replaced T8 fluorescent light fittings with T5 high frequency fittings, and also introduced low voltage downlights.
The Carbon Trust has published a new guide offering information on how to choose the most energy-efficient and high-performance lighting. You can download the guide here and here are some top tips to get you started:
- Install effective lighting controls. With the right lighting controls you’ll get the right light in the right place and at the right time. It’s essential not to needlessly light your premises if you want to save electricity.
- Don’t rule out a more thorough refurbishment. It may seem difficult or like a hassle to replace your existing wiring, but the money you could save might outweigh the cost and inconvenience.
- Think maintenance. Keep your light fixtures clean and in good working order - especially the reflectors and panel diffusers - to make sure the lighting performs as it was designed.
The Carbon Trust is running a free webinar on how to significantly reduce running costs and improve the lighting in your building on 14th December at 12pm – you can sign up here.
Feed-in Tariff deadline approaches
The Feed-in Tariff rate is being cut in half, but there's still time to get the higher rate - just.
On the 12th December 2011, the government will cut Feed-in Tariff rates for both domestic and small business installations by 50%, from 43p per kWh to just 21p per kWh.
As a result, people who want to take advantage of the current rate are rushing to have their renewwable energy technology installed before the deadline. As a result, many solar panel installation companies in particular are struggling to meet the increased demand.
Renewable energy supplier Good Energy has reacted to this tariff deadline by opening its Chippenham offices for the weekend on the 10th and 11th of December, so that more people can register before the closing date which is at midnight.
Anyone interested in getting small-scale solar electricity generation for their home or business will be able to visit the office over the weekend to submit their applications in person, or call in and get any last minute advice over the telephone. Those who have installed projects will also be able to pop in to the offices and sort out any outstanding paperwork they may have before the deadline passes.
Some businesses feel that the government’s new reduced tariff will mean it will now take longer for them to earn back their investment and a lot less cost-effective for anyone interested in protecting the environment by installing solar panels.
Renewable Heat Incentive opens to businesses on Monday
Could the launch of the Renewable Heat Incentive mean biomass boilers become a familiar site?
From Monday, businesses can start earning money for any renewable heat they generate under the Renewable Heat Incentive.
Businesses that install renewable heat technologies like biomass boilers, solar and heat pumps (or installed them after 15 July 2009) will be paid for each kWh of energy they generate.
Businesses can earn up to:
- 7.9p per kWh for biomass boilers;
- 8.5p per kWh for solar thermal;
- 4.5p per kWh for heat pumps.
Payments are fixed, will be adjusted annually with inflation and will be made every quarter over a 20-year period. Ofgem will deal with applications and make the incentive payments.
The government hopes that the Renewable Heat Incentive will encourage as many as 14,000 businesses to install renewable heat technology by 2020 because the payment should bridge the financial gap between the cost of conventional and renewable heat systems.
The initiative should also cut emissions by 43 million tonnes of carbon by 2020 - which is equivalent to the annual carbon emissions of 19 new gas power stations.
The payments are significantly smaller than those made under the Feed-in Tariff, which currently pays 43.3p per kWh (although this is set to drop to 21p per kWh soon). However, the renewable heat generated is replacing gas consumption rather than electricity, and gas is cheaper per kWh, which goes some way to explain the difference.
Are you tempted to install renewable heat equipment because of the initiative? Do you think it will make a difference? Is this more attractive than the Green Deal? Let us know what you think in the comments.
For more information on renewable energy visit our partner company Business Juice.
A Green Deal for businesses?
DECC has today published a new consultation on the Green Deal, a government initiative which will invest £14bn in energy efficiency from October 2012.
Although the domestic market is the main beneficiary of the green deal, there are some benefits for businesses too.
The consultation says that every British business will be able to install energy-saving measures like insulation with no upfront cost; the repayments will be made from the savings the business makes on its energy bills.
While help with eenrgy efficiency is likely to be welcomed by many businesses, there is a flipside: the cost. The money to pay for the Green Deal has to come from somewhere and the consultation also includes an analysis of what impact the Green Deal will have on on business energy prices and bills:
As the graphic shows, while policy will mean an eventual reduction in energy bills for domestic customers, it will lead to an increase for businesses.
The consultation emphasised that while it’s important that businesses play their part in the transition to a low-carbon economy, it’s vital that they remain competitive too. So before the end of the year, the government will be announcing a package of measures to help energy-intensive businesses.
I asked our director, James Constant for his take on the Green Deal consultation:
“Any help to enable businesses to reduce their energy overheads and protect the environment is to be welcomed, however this should not be at the expense of increasing the transparency of the market and fair pricing for businesses.
“For too long domestic customers have been the sole focus of market improvements and businesses have been left to suffer in hopeless silence; as a way to raise business energy up the agenda this move is welcomed, but there shouldn’t a sting in the tail of price rises to support the benefit for the few who are able to make use of the energy efficiency measures being proposed.
“It would be far better would be to increase market transparency, encourage innovative new suppliers to enter the market and make smart meters and active energy management the cornerstone of business energy efficiency. This would not only reduce unnecessary energy costs, but also boost businesses’ cashflow with accurate billing.”
New Ofgem business energy proposals: our thoughts
Ofgem has announced proposals for reforms to the business energy market; how will they affect your business?
Ofgem has announced new proposals, designed to reform the business energy market.
The four proposals are as follows:
1. The first proposal is to add new standards of conduct to energy suppliers’ licences and give Ofgem the power to enforce them if they are breached. The aim is to ensure that suppliers and brokers are fair, honest and transparent. In addition, all sales and marketing to businesses will have to be accurate, not misleading and written in plain English.
2. The second is to extend existing licence conditions which protect micro-businesses to cover larger small businesses (businesses with less than 50 employees and an annual turnover of no more than €10 million). These rules will mean suppliers have to provide clear and transparent contract terms and conditions up-front and regulate how contracts can be rolled over.
3. Thirdly, Ofgem is proposing that there should be a range of reforms to give businesses more protection from unfair sales practices. These reforms include an Ofgem accreditation scheme for Codes of Practice governing energy brokers, and new powers to take enforcement action directly against brokers for misleading marketing. (Ofgem will have to ask the government for this last reform because it currently has no direct powers to take enforcement action against energy brokers that only deal with business customers.)
4. Finally, Ofgem is currently reviewing whether suppliers are complying to licence conditions which are meant to ensure suppliers cannot “unjustly frustrate” businesses which want to switch to another energy supplier. Ofgem also said that it is considering enforcement action against some suppliers over the issue.
These proposals come in the wake of an Ofgem investigation in March which found that many businesses were concerned about confusing terms and conditions, potential misselling by energy brokers and energy suppliers misusing their powers to block businesses from switching supplier.
Ofgem’s Chief Executive Alistair Buchanan commented on the reforms: “This will greatly increase the protection for businesses, especially for smaller firms. As we have demonstrated in the domestic market, we will also take a tough line on any suppliers we find systematically breaching rules designed to protect businesses.”
So, what’s our take on the proposals?
Well, obviously we strongly support anything that Ofgem does to improve transparency and encourage a competitive market.
It’s also good to see market reforms for small businesses; for many years all the attention has been on what’s been happening to consumers, and this shows that Ofgem is rolling up its sleeves and getting ready to get stuck into the business energy market too.
We think that extending existing micro-business rules to larger small businesses would be a positive change; whether you are a corner shop or a nationwide chain the principles of fairness should remain the same. Many businesses end up on uncompetitive and anti-competitive rollover or evergreen contracts and ‘caveat emptor’ is an unacceptable response. The key here is making sure that businesses know whether or not these rules apply to them and that suppliers don’t put them in the wrong category.
When it comes to the reforms concerning third-party intermediaries and brokers, we’re strongly in favour of self-regulation with the support of suppliers and Ofgem. We also think that the same set of rules that third parties are expected to adhere to when it comes to marketing activity should also apply to energy suppliers. If we’re going to build confidence in the market, businesses need to feel sure that they will be treated fairly whoever they’re dealing with.
In the case of suppliers making it difficult to switch business energy supplier, we’d like to see Ofgem place the onus on suppliers to justify any attempt to block or object to a switch. Businesses that have the potential to save significant sums of money from trying to switch should not be blocked without a very good reason. Businesses should also have the right to raise concerns over an objection to the regulator and be sure of a thorough investigation if they feel they have been blocked unnecessarily or unfairly.
Overall, Ofgem’s announcement is a very promising step in the right direction, but it's just the start of a much-needed overhaul.
How much could you save on business energy bills in your area?
Use this map to find out how much businesses in your area save on their energy bills with uSwitchforBusiness. (It can take a while to load, so please be patient!)
On average, businesses in Slough and Northampton are overpaying by the most before they come to us; businesses in the two locations save an average of over £1200 when they switch. Nottingham was in third place - the average saving there is over £1000.
At the other end of the scale, businesses from Crewe and Sunderland seem to be the most switched on when it comes to business energy; when it's time for them to renew their contracts they don't tend to be able to find a cheaper deal than the one they're on.
Why are there such differences in the average savings in different towns? The main reason is that business energy suppliers charge different prices in different areas. A second factor could be that some areas are known for a particular kind of business or industry - if that business or industry is more energy-intensive, then it has the potential to make a bigger saving.
Whatever area or industry or area you're in, give us a call to talk about your business energy bills, or get an instant quote with our online business energy comparison.
How to be smarter with a smart meter
Is a smart meter a smart choice?
In the news recently was a story written by the Daily Telegraph off of the back of a press release from an energy broker; it raised concerns over the ease with which energy brokers can help business energy customers switch supplier when a smart meter is installed, and also suggested that many business energy customers were switching from smart meters to save money.
A spokesperson for the broker, said of smart metering in the business energy market: “It restricts their switching ability”.
It’s an interesting point, one we have covered before (Pence per kWh or kWh, that is the question) but it is fair to say that we do not entirely agree with this opinion.
In truth, a small minority of customers who were early adopters of smart metering may find that when switching supplier, their new supplier - and more specifically the meter operator they use to collect meter readings - is unable to interact with the specific meter installed for either technical or commercial reasons.
That clearly is not ideal, but in our experience of both energy supply and energy brokerage this is most definitely a minority experience and should not be allowed to overshadow the huge benefits of smart metering.
A few years ago, in anticipation of the potential difficulties for switching, very maturely and collaboratively, the industry got together to find a solution. (That in itself is somewhat unusual in the business energy market!. As a result, the concept of 'inheritor agreements' was established between most of the larger smart meter providers and the energy suppliers, whereby on switching the incoming supplier takes on the responsibility for the smart meter and the customer should, as a result, feel no impact.
But what is of particular interest in the Telegraph article is the concept that ‘switching saves money’. Clearly it does, and clearly using a reputable business energy brokerage will help a business get the best deal in the market. However, that does not always necessarily have to involve switching suppliers or ditching your smart meter.
The two main benefits that smart meters bring are:
- they show you you how much eenrgy you use and help you reduce consumption;
- they ensure you get accurate bills.
In truth the cost savings from using less energy and the cashflow benefit from accurate billing far outweigh any benefit from getting a digit shaved off your pence per kWh for many businesses. If you aren't watching how much energy you are using or how accurate your invoices are a smart meter will make a reall diference. Clearly there will be exceptions to this, but the fundamental point is that the customer would be far better to use a broker to negotiate a better deal from their existing supplier and still receive the benefits of the smart meter than switch away for a marginal headline saving and lose those benefits.
It is important that as brokers we provide the best deal for the customer’s circumstances and if that doesn’t involve switching but does involve improved technology and contract negotiation then that is what we will recommend.
Ultimately technological advancement will change the business energy market for the better for both the environment and the bottom line for business. It takes a shift in attitude from suppliers, regulators and customers, but equally it requires a change in mindset from brokers to make sure they understand the market, the benefits of technology and how businesses can optimise their ability to save money and take control of their energy costs beyond simply switching.
- 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