When you think about switching your energy tariff, it’s natural to automatically think of your home, but businesses of all sizes also have the ability to switch their energy tariff in the same respect as residential customers. Whether you are a small business owner or the CEO of an international conglomerate, it is vital to think about your gas and electricity expenditure, as this could knock huge percentages off your yearly bills, increasing your profits with no extra work at all. There are a number of variables that apply to business customers, some of which will be detailed below, but first, why should you switch your business tariff?
Why should your business switch?
Many people are sceptical, for both residential and business properties, that switching their energy tariff won’t provide them with enough of a saving to warrant the ‘stress’ that is caused by the process. Well, unlike many other industries that have provided poor customer service levels in the past, switching your energy tariff is extremely simple. Resolving issues that occur within your term is another thing, but that should be taken into consideration when choosing your desired tariff. And as for the savings, well, you may be surprised just how much business customers can save by switching their tariff. Here’s a real life example:
Location: Central Manchester
Usage 35,000 kWh per year
Payment method: Direct debit
Plans available: 62
Cheapest: EDF Energy ‘Fixed for Business 72 to Sep 18’
Price per kWh: 12.140p
Standing charge: 25.00p per day
Yearly cost: £4,036.43
Most expensive: EDF Energy ‘Business Connect 72 to June 18’
Price per kWh: 20.200p
Standing charge: 50.00p per day
Yearly cost: £6,744.83
Here we can see that the difference between tariffs, even through the same company, is absolutely huge. A massive £2,708.46 price difference for exactly the same product, the same usage, the same everything. Just by switching your energy tariff you could be saving thousands of pounds per year for no extra work at all.
What types of tariff are available?
In the most basic form, tariffs are either fixed or variable, which refers to the price per kWh that you pay for each fuel. A fixed tariff’s price per kWh will not change for the duration of your term; however, a variable tariff will move up and down with wholesale costs and general energy trends. This is the extent to which residential energy is divided. Business energy on the other hand, is divided into much more tariff types, and they are as follows:
Standard variable tariff
Just like the residential standard variable tariff, this means that you will pay for a varying price per kWh. This will generally change once a month in either direction. Sometimes this can work in your favour but more often than not, it will be on the rise. This is also often called a ‘default tariff’, as it is the tariff type that you automatically get put on if you do not have anything agreed for after your fixed tariff expires. This tariff type also has no contracted time period.
This kind of contract is, as the name would suggest, fixed for a specific time period. On this tariff you will pay one price per kWh per fuel that will not change while you are still in your contracted term. For larger customers, this unit price will generally be discussed and negotiated over the phone.
This type of contract refers to the manner in which your contract handles itself when it gets to the end of its term. Also known as an ‘assumptive renewal’ or an ‘evergreen’ contract, this tariff type will automatically renew itself after the agreed period, for the same period again. These tariffs can often seem cheaper at first, but if you don’t organise a switch for the end of your contract end date, you’ll have another year or two in the same contract with a revised tariff price set by the energy company.
This is the most common contract amongst those companies that have not switched since the energy markets opened in 1990. This tariff type, like the standard variable, very rarely has a competitive unit price; however, it does allow a great deal of flexibility, permitting customers to switch after 28 days.
This tariff type generally applies to those businesses that have just moved premises. It is a kind of ‘halfway house’ that also allows customers to switch after 28 days. This should not be used as a long term tariff as unit rates are generally extortionately high.
How do you actually make the switch?
Just like residential energy switches, there are a number of ways in which you can go ahead with the switch, but due to the size of some businesses, it is often recommended to actually speak to your potential new supplier to negotiate the terms of your contract. Unlike residential tariffs, there is much more room for manoeuvre when it comes to business unit rates, as large business users often offer their energy supplier a huge financial contribution due to their sheer usage amounts. The usual methods of switching, such as comparison websites and online quotations are still valid for business customers, but following up with your findings for what tariffs are cheapest with a phone call to your desired provider will usually work out as more beneficial than just going ahead with the switch.