Overview of Business Electricity Contracts

In the 1990s, the energy industry was deregulated allowing domestic and business customers to choose their preferred energy supplier. Business energy is sold in one, two or three year contracts, domestic energy is not. Nearly two million small business customers (SMEs) now have the freedom to choose their energy supplier. Business owners can now choose from any supplier in the UK.

Switching suppliers does not mean laying new cables or digging up the street. Electricity and gas will be delivered to the customer’s premises in the same way as it does now. If a customer has a problem with their meter, cables or other equipment, they can call the emergency number provided by their new supplier and the level of service received for emergencies will not be affected. The only change to the customer is that the new supplier will now invoice the customer (at a cheaper rate).

THE ‘BIG 6’ ENERGY SUPPLIERS

So who can you choose from? The market is dominated by six major players. They are:

BRITISH GAS – Trading as Scottish Gas in Scotland. Part of the Centrica Group.
SCOTTISH POWER – Now owned by Spanish Company, Iberdrola. Includes Manweb.
SCOTTISH & SOUTHERN ENERGY – Includes Swalec/Southern Electric/Scottish Hydro Electric/Atlantic Gas & Electricity.
EON – German owned. Includes Powergen/Economy Power/Norweb/Eastern Electricity/East Midlands Electricity/Independent Energy.
NPOWER – Includes Midlands electricity/Yorkshire Electricity/Northern Electric.
EDF – Electricite de France, French state owned company. Includes SWEB/Seeboard/London Electricity.
And then that are some other, smaller, suppliers that you will hear about from time to time:
OPUS – Smaller supplier based in Northampton.
CORONA ENERGY – London based gas supply company.
CONTRACT NATURAL GAS (CNG) – Small Harrogate-based gas company.
Plus the likes of: ELF, Gazprom, Shell, Total and Haven.

WHAT INFORMATION DO YOU NEED TO SEARCH FOR A COMPETITIVE QUOTE?

There are three basic pieces of information supplier, brokers or price comparison services will need to know in order to give you a quote. These are:

1. Who your current supplier is an estimate of your annual consumption - you can usually find information related to consumption on a current bill.

2. Your current contract status – ie if you are in a contract and, if so, when it expires.

3. Your Supply Number – commonly called an ‘MPAN’ for electricity contracts or an ‘MPR’ for Gas.

The supply number identifies a customer’s supply details and is required to allow a customer to transfer their electricity supply from one supplier to another. The supply number can be found on previous bill and shows a unique meter reference number (10 digit 'MPR' for business gas or a 21 digit 'MPAN' will start with an 'S' for business electricity) which is needed to confirm consumption. It also explains what kind of meter you have, which supply area you are in and what kind of electricity/gas user you are. It ensures that any quote you receive has the correct energy prices.

BUSINESS ENERGY PRICING MODELS

Energy (both gas and electricity) is measured in kilowatts and priced in kilowatt hours (kWh). Most business energy bills will also include a standing charge, climate change levy, VAT and when appropriate will also include a capacity charge and/or reactive charge. Climate change levy has been revised several times since it was introduced in 2001 and currently stands at 0.47p/kWh for electricity and 0.164p/kWh for gas. VAT on business gas and electricity is charged at 15%

Business are usually on Evergreen – or rollover -contracts, meaning that unless the business serves notice to leave the supplier, they will be automatically rolled over year on year to increased rates. Unlike gas, where all units used are charged at the same rate regardless of when they are used, electricity can often be charged at different rates depending on the time of day, time of week or month of the year.

The role of a broker is to find the best price that helps cut costs for each business customer and makes it easy for them to switch supplier. A broker should always offer this service for free because it will receive a commission from the supplier for introducing new customers. The best price is based on cutting the cost off the customer’s latest contract renewal price from their current supplier, rather than the price from an old contract several years ago. Deals will change day to day dependent on suppliers and what they are paying for wholesale energy. Make It Cheaper, for example, not only searches the whole of the supplier market to give the customer the best possible price available that day but some suppliers will provide it ‘special’ cut price rates which are then passed onto customers.