Your home and business
energy bills might be rising, but there is a way to cut costs off
the back of more news of costs creeping up. Make It
managing director Jonathan Elliott explains.
British Gas has announced it is to hike household energy bills
up by another 6% - which is surprisingly good news for businesses.
No one likes a price hike - particularly one that is universally
considered by all except the utility companies to be excessively
However, believe it or not, there is an element of good that
comes from this situation.
In 2010, we were frustrated by the lack of any official figures
for the number of businesses who regularly switch energy suppliers.
So we conducted our own research among 500 SMEs. Alarmingly we
found just 7% regularly switch energy suppliers. That's not to say
more weren't trying - many were being prevented from switching
because of the presence of controversial rollover contracts.
We repeated the research in 2011 and saw a marginal increase.
Just last week, research conducted by Cornwall Energy for Consumer
Focus found 16% of businesses regularly switch.
There's still a long way to go, but for the number of businesses
actively switching providers to have more than doubled in a couple
of years sends the message to the energy companies that higher
prices drive customers away.
In other words: the market is working - certainly better than it
was. Would we have witnessed this rise in proactive engagement from
small businesses without the widely publicised price increases for
domestic energy customers? I very much doubt it.
At our 100-seat call centre in Central London, we see a
significant spike in enquiries from businesses every time energy
prices hit the headlines. It's the nudge that a lot of business
owners need to get on and do something they've been putting off for
Business energy prices don't zig-zag as wildly as domestic
prices. Instead they go up and down (mainly up) all the time, but
by smaller amounts. In the last month, for example, we've seen two
of the 'Big Six' energy providers actually decrease their energy
prices by an average of 1.6%, while the other four raised theirs by
an average of 4%. With business gas prices the average figure went
up by 2.5%.
Would this be enough to make their businesses customers vote
with their feet? Possibly, but far too few decision makers ever get
to hear about business energy prices, as they are never
Also, the majority of businesses are in fixed-price contracts
which provide some protection against incremental increases - at
least until the contract comes up for renewal when any recent or
predicted market movements will be reflected in the new price.
Anyway, back to the good news… Let's say that 1,000 additional
businesses will contact us as result of the British Gas domestic
price rise. We are likely to be able to help half of them either
switch or re-negotiate their contracts at rates that might be 30%
lower than their renewal - or rollover - offers.
With an average annual energy bill of £4,000, that's £780,000
we'll be redirecting from the dividends of the energy
companies over the coming year and adding it to the profit of
smaller businesses who, arguably, need it more. Or to put that into
terms that companies large and small would understand, it's enough
to create 88 more apprenticeships.
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save your business thousands. Click here for more