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March 2021
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Top Ten Tips For Cheaper Commercial Electricity

Top Ten Tips For Cheaper Commercial Electricity

The cost of gas and electricity has never been higher so it is no surprise that public sector organisations of all types and sizes are looking at ways to cut down on consumption. What many are also waking up to is that there is no such thing as customer loyalty with UK energy suppliers and – by staying with one supplier from one year to the next – you will end up paying more expensive rates. The difference between ‘new customer’ and ‘repeat business’ electricity rates, for example, can mean a saving of £2,000 a year for a non-domestic building using an average 25,000 kilowatt hours.

It is no wonder then that more and more organisations are looking into the option of switching. However two-thirds of would-be switchers suffer setbacks because they are unaware of the contractual obligations they have with their existing supplier. Here are some tips to avoid the traps.

Get On A Contract. It is actually better to be in a contract than not. Out-of-contract rates are the highest you will ever pay. So if, for example, you’ve just taken over new premises but not contacted the utility suppliers to tell them that you are the new bill payer, you will automatically – and indefinitely – be put on rates that could be three times as high as you would pay in a contract.

Compare Rates First. Shop around before accepting a contract. Price comparison services will tell you immediately if the rates you are being offered are competitive and, if not, do the legwork of finding out which are the better deals. EG The current range for business electricity contracts is between 8p and 14p per unit.

Don’t Pay For Advice. Do not pay for price comparison or switching services – however helpful, efficient or effective they are in saving you money. As a general rule, they offer their services to you for free because they earn a fee from suppliers when you switch.
Check Notice Periods. Once on a contract, make a note in your diary of renewal dates and what notice you need to give to accept or reject renewal terms as many suppliers make it difficult to switch at the end date.

Each supplier has different rules but the notice period ‘window’ can be as narrow a week and is activated as soon as a renewal letter is sent which, in some cases, is as much as 120 days before the contract is due to end.
Don’t Be Complacent. If you miss your notice window, you will be automatically ‘rolled over’ and locked-in to an uncompetitive rate for up to two years.

The ‘Assumptive Renewal’ trap that suppliers use is legally-binding even if you do nothing and ignore their letters.

Be A Serial Switcher. Savvy businesses review their rates and switch, if necessary, every year. It only takes a few minutes over the phone and, by doing so, you are always guaranteed the lowest bills. Datamonitor reckons energy suppliers loose money on new business customers in first year but make 32% profit from them in the next.
Serve Notice Regardless. Not everyone has the patience to keep a track of when their contact is up for review.

The best way to get around this is to send a notice letter immediately, irrespective of how long your contact has to run. Save a copy as proof so you have all your options open when it is time for renewal. You cannot be cut-off for doing this and, given that your current supplier knows your intentions, they will be more inclined to offer you competitive rates at your renewal.

Refuse Winbacks. Those that switch are often contacted at the eleventh hour by their old supplier with a better rates or a cash-back offer. This ‘winback’ practice is banned by Ofgem as it can often mean the customer ending up with two contracts and a fine from the new supplier for reneging on their agreement.

Other Overheads. Review other overheads at the same time such as water, mobiles, landline and broadband to see where else you can save money. You may find that there is a way to get out of existing contracts and find savings to be made on things other than gas and electricity.

Sign-up For Help. For those in any doubt about their existing contract obligations or just looking for an easy solution, Make It Cheaper offers a free service which logs your utility renewal dates and, during the notice window, will contact you to recommend the best available rates in the market to switch to. If requested, we will then serve notice on your behalf and arrange new contracts, making sure that you are not rolled onto expensive rates further down the line.

Established in 2007 and based in Central London, Make It Cheaper receives more utility price comparison enquiries (2,000 a week) and arranges more new contracts (1,000 a week) than any other commercial-only price comparison service. These enquiries include those from the business customers of most of the major domestic price comparison services as well as business membership organisations, charities and trade associations.

Acting on behalf of these customers with total impartiality and without charge, Make It Cheaper offers cost savings across a range of products including electricity, gas, insurance and telecoms. The prices it offers are often better than could be found by going direct to suppliers because of the volume of deals its negotiates.

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