As an SME, when last did you change your utility provider? 

The attached article shows the incredible financial gain for utility suppliers when their customers stay with them for years on end without negotiating a better deal.

What can you learn from this?

The lesson should be clear: as with other aspects of your business, you should take control of each of your utility accounts, to put your business in the best possible position to get a great deal.

I'd suggest that you start this process by considering the following steps:

1. What does your existing contract say?

Check the terms and conditions of your existing contract to determine how long it runs for, and the procedure for cancelling the agreement. If you don't have a copy of the agreement, request it from the provider. Depending on the terms agreed, you may find that if you fail to give notice to your supplier to end your contract, your supplier may roll your contract over to a new contract.

As far as the energy market (both gas and electricity) is concerned, a "micro business" can expect a rollover for a maximum period of one year. To qualify as a micro business you'll need to fulfil one of these criteria:

  • employ fewer than 10 employees (or their full time equivalent) and have an annual turnover or balance sheet no greater than €2 million, or
  • consume not more than 100,000 kWh of electricity per year, or
  • consume not more than 293,000 kWh of gas per year.

Ofgem, the energy market’s regulator, has some useful guidance for micro businesses which can be found here.

2. Obtain quotes before the cancellation period

Get a quote from your current supplier in advance of the cancellation period, but be careful not to commit to them for a new fixed term supply until you've had the opportunity to compare their offer to other suppliers in the market.

When you approach other suppliers make sure you get detailed information from them on the terms they are offering, in particular their tariff, the duration of the contract and the termination provisions. It's best to get this in writing, to give you the opportunity to read through it carefully and to query anything you don't understand.

3. Know the rules - no automatic cooling off period

Contrary to popular belief, there is no automatic "cooling off period" for most business-to-business agreements, whether reached over the telephone, at your business premises or on the internet. If you do want the flexibility of having a specific period in which you can cancel the contract without penalty, you'll need to negotiate it as part of the contract and it's advisable to evidence that in writing. 

4. Provide regular meter readings to your supplier

This may create extra admin for you, but as commercial utility suppliers read meters infrequently, it'll help to avoid estimated bills and should provide a clear picture of your consumption. It could also be vital in the event of disputes or when you are negotiating new deals with suppliers.

Note that if you just moved into a new premises, you may find that you are on a contract by default (a deemed contract) at an unfavorable rate. Ofgem has guidance on this on their website which can be found here

The technical rules I summarised apply to businesses but you may want to take some of the principles on-board to apply to your personal life. 

If you’re interested in joining our community or finding out more, give us a call on 0345 351 0025 and we can talk you through your options.

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