As businesses look to tighten purse strings and keep costs down during a volatile economic climate, many will be looking to switch contracts to find the best business electricity rates.
In a competitive energy industry, there is great variability amongst electricity suppliers to provide the best possible deal for customers. This also means that there is almost always a better deal waiting just around the corner.
However, understanding whether you will be penalised for cancelling your current contract help you determine whether or not it is worthwhile for your business to switch to a new supplier and find the best business electricity provider.
While it is true that cancelling an energy contract is more difficult for businesses than domestic customers, understanding the terms of your electricity contract is key to knowing whether or not you will be able to cancel your contract for a better deal.
Generally, you can only cancel an electricity contract during the contract term if your business:
- Moves location
- Goes bankrupt
- Is on a deemed or out of contract tariff currently
If none of these apply, you may still be able to cancel your current business electricity contract and switch to a new supplier. The key is to read through the terms and conditions of your contract before contacting your current provider to seek solutions.
Look for a switching window in your contract
While Ofgem regulations do not stipulate that energy suppliers must have the 49 day switching window that is mandatory for domestic users, many suppliers will still offer a window in which you can switch to a different supplier without penalty.
What happens if my contact has completed its initial term?
Many businesses will have already run beyond their initial contract period without realising it, often rolled over to over-the-odds deemed contracts that cost significantly more. If this is your business, you should look to switch and save right now.
For most businesses, energy contracts will last for up to five years, so choosing your next contract is an important decision. There are opportunities to tailor your contract to your unique business needs, and in an energy industry filled with competition, there is room to negotiate for a better rate.
How soon should I start looking for a new energy supplier?
Being proactive and ensuring that your business electricity contract is up-to-date and at competitive rates will ensure that you save in the long run. Doing the research early will give you time to compare quotes from different suppliers, and leverage this to your advantage when negotiating for improved rates for your business.
How do Ofgem regulations protect smaller businesses?
Ofgem regulations state that energy suppliers must send renewal reminders to SMEs at least three months before the end of the contract. This will give you the time that you need to find the right supplier for your needs.
According to Ofgem regulation, businesses that fall under microbusiness classification are exempt from the penalties of larger organisations. Microbusiness customers can give termination at any time during their contract.
What classifies as a microbusiness?
To classify as a microbusiness, your organisation must:
- Consume less than 293,000 kWh of gas, and 100 000 kWh of electricity per year.
- Have an annual turnover of under €2 million
- Employ fewer than 10 people, or their full time equivalent.
If your business falls under this criteria, you can look to switch and save now!
How do I compare different contracts?
When comparing contracts from different suppliers, you should look for two key costs:
- Price per kWh – this indicates how much you will pay for your electricity and is calculated as pence per kilowatt-hour.
- Standing charge – this indicates the price that you pay to receive the services, over and above the energy that you consume. It is important to note that your electricity and gas rates will both include individual standing charges.
When looking through quotes from different suppliers, compare them to the usage of your business during both winter and summer months. There will be times when your business uses more energy than usual, so gauging which contract will work best for your business will require understanding your usage trends.
What are my options when it comes to new contracts?
There are several different tariff options for businesses to choose from when it comes to finding a new contract.
They include the following:
Fixed term contracts, where the unit price is fixed for the duration of the contract – giving your business an easy way to forecast expenses
Variable rate tariffs, which allow your business to take advantage of dips in the price of electricity, but can see you paying more during times of high demand.
Time of use tariffs, such as Economy 7, which will see your business paying a discounted rate during off-peak hours, but more than the average during peak hours.
Deemed rates, also known as out of contract rates, which are usually applied to a business when a new contract isn’t agreed.
Finding the right contract for your business will depend on your unique requirements. It is worth exploring these options with potential suppliers.
Who is the best business energy supplier?
Finding the best energy supplier for your business will depend on a number of different factors. Some of these factors include:
- Geographical location: cheaper energy tariffs are usually found in major cities due to economies of scale and transport costs.
- Type of business: any business that can run outside of peak hours is likely to be offered a lower price for their electricity from suppliers.
- Credit rating: the better your credit rating, the more likely a supplier will offer you cheaper tariffs.
- Business size and consumption: the more energy that your business uses, the more likely you are going to be able to negotiate for a rate that suits you.
- Contract length: while not always the case, the longer the duration of your contract – the cheaper your electricity ends up being.
The simple fact is that there is no one energy supplier that can offer the best rates for all businesses. That’s why finding a trusted partner that can source quotes from a number of different suppliers can save you hundreds or even thousands of pounds a year.
With business energy deals in particular – where you are often tied to long contract periods – finding the right supplier is ever more important.
How do I change my business electricity supplier?
Once you have identified the right contract for your business, get in touch with your current supplier and let them know that you intend to switch. For the most part, your new supplier will handle the details when it comes to switching, but you will have to ensure that you give the required notice, that any outstanding bills are paid and that the terms of your contract will allow you to switch.
The easiest option is to get a business energy consultant to handle the entire process for you!
Once you’ve found a new supplier, you can begin the process of cancelling your current electricity contract
- Your energy switching provider or new supplier will let your current supplier know that you intend to switch (you can also do this if you would prefer)
- You will give the required notice, as stipulated in your contract terms
- You will confirm when the new supply will start
- You will agree to the contract with your new supplier
- You will pay off any outstanding bills with your current provider
It is important to note that switching suppliers must be done by either the business owner, or an authorised person within the organisation.
Cooling-off periods generally do not apply to businesses, so make sure that you are confident in your decision before agreeing to a new contract.
It usually takes between four to six weeks to transfer supply from your current energy provider to the new one, so take this into account before making the switch.
How can I find the best business electricity rates?
Often, finding a trusted partner with a solid understanding of the industry will lead to the best results when it comes to finding the right electricity contract and the best business electricity rates for your business.
At Smarter Business, we compare quotes from 27 of the best business electricity suppliers, exploring the options that will provide your business with the greatest savings in the long run. We take the time to understand your business, and use this information to determine the best contract for you, long-term.
We have a comprehensive understanding of the industry, and will negotiate with potential suppliers on your behalf. With over 40 000 businesses saving on their utilities through Smarter Business – we know when your business is being offered rates that are too high.
Looking for expert advice on the best solution for your business going forward? Get in touch with us today.