Your Country Needs You to Switch Your Business Electricity

According to independent research conducted among 1,000 UK small businesses on behalf of Electricity 4 Business last year, only 20% of businesses know when their commercial energy contracts are due for renewal. Why is this statistic so significant? Well, in order to switch provider and take advantage of the cheapest business electricity rates in the market, you need to know your contract end date so that you can serve the necessary notice beforehand. Failure to do this results in you being rolled onto more expensive business electricity tariffs for at least another year. The fact that so few people know this vital piece of information nicely illustrates why even if a business manages to compare their business electricity prices… so few fail to switch. Indeed one the Big 6 business electricity suppliers puts the figure of small businesses that have their energy contracts automatically rolled at over 95%.

So with just 5% of the commercial electricity market switching, how competitive - or not as the case may be - would you expect business electricity prices to be? Well, rollover rates for electricity are up to 7p per unit higher than new customer rates found by doing a quick search through business electricity price comparison websites. With an average annual electricity consumption among SMEs of 32,000 units (kWhs), that’s a difference of a whopping £2,240 more a year per business than the cheapest electricity for exactly the same consumption.

With an estimated 1.8 million premises that have business electricity meters, that’s fewer than 100,000 a year managing to switch. Compare this number to the switching rates among households (which don’t have such complicated rules for transferring accounts). Ofgem, the energy industry regulator, says that annual customer switching rates are at the highest ever with 5 million switching to cheaper electricity and 4 million gas customers – that’s more like 20%.

Why the big disparity between households and business? You would have thought that the downturn would mean that businesses could not afford to be so complacent and that they would be looking for every opportunity to save – including via business electricity cost comparison. Certainly a recent survey by the Major Energy Users Council would suggest that was the case. It found that uncertain and volatile energy prices were the number one concern and that lack of competition among business electricity providers was close behind.

However, by not knowing their contract end date, businesses are not just ruling themselves out of better rates but they are doing a dis-service to every business in the UK by discouraging competition for commercial electricity prices. Whether domestic or business energy, the market heavily relies on people switching to drive down prices. That’s not our view but that of the Regulator - Ofgem – which says: ‘Customer switching in response to poor service or uncompetitive prices helps to keep the market competitive.’. As a business owner, it really is your duty to switch.

This is where the role of a business energy expert comes in - to compare prices and advise you about contract dates. Business owners are not regular energy buyers so it makes sense to seek independent advice on rates, suppliers and terms of contract. Impartiality and view of prices across the entire market is crucially important when choosing an advisor otherwise you are in danger of being tied into a contract that is good for the ‘advisor’ but not necessarily you. What also sets some experts apart from others is those that not only help you switch suppliers but make sure you are not caught out by the suppliers’ small print at the next renewal.

Once customers of Make It Cheaper, for example, have used the business energy price comparison service once, they will get a follow up call when they are next able to switch to check whether they are still getting the best deal. It’s this passion about getting the cheapest electricity and gas deals for its customers over the long-term is why it has attracted so many customers and partners. Most of the major household price comparison websites, charities, membership organisations, banks, trade associations and a number of SME champions all send their business energy enquiries to Make It Cheaper as they know they’ll continue to be well looked after once the initial switch has happened.