Energy Crisis Hits Small Business

Energy Crisis Hits Small Business

Nov 28 - Director

UK ENERGY PRICES have increased sharply in recent months, with further hikes predicted. The independent gas and electricity watchdog Energywatch warns that "thousands of small businesses are being pushed to the limit." Calls from small and medium-sized enterprises (SMEs) have increased by 20 per cent in the past year, and, on average, 900 business consumer complaints are lodged every month. In response, it has established a Business Services Team dedicated to helping SMEs.

Research by energyhelpline.com, a price comparison company, says that over half of UK companies are paying too much for their energy supplies due to confusion over contracts with utility company. "Given the recent price hikes by energy suppliers, businesses need to be aware of ways to save money," says a company spokesperson.

Based on its research of 1,000 businesses, it says that in October, 10,000 businesses would be locked into "rip-off rates" for an extra 12 months because they had not immediately prepared to switch energy contract or supplier. Around 35 per cent of businesses are not on any contract, so are subject to price rises of up to 40 per cent.

THE PROBLEM

"Many suppliers count on customers not shopping around to find the cheapest energy," explains Mark Todd, director at energyhelpline.com. "For a corner shop, this could mean losing more than 1,000 per year in excessive rates. A large hotel chain could easily be haemorrhaging tens of thousands of pounds," he says. Businesses should take the time to shop around to ensure they are on the best tariff, advises Todd. He also suggests choosing a supplier that will freeze tariffs, thus avoiding the average 20 per cent annual increase in prices. Serve immediate notice to the supplier, which can be reversed at a later date, to confirm you are not tricked into a contract renewal at higher rates.

THE SOLUTION

Environmental taxes, notably the Climate Change Levy, increase the financial burden on companies. This can be easily minimised or avoided completely. For example, renewable energy (generated from sources such as wind power) is exempt from the levy. Businesses signed up to one of the growing number of green tariffs avoid levy costs. Many of the online price comparison services can easily compare prices.

"Don't automatically assume that by doing your bit for the environment it will cost you any more than the traditional suppliers," says an Energylinx spokesperson. Some green tariffs are no more expensive than traditional electricity tariffs.

Of course, simply reducing energy consumption cuts energy spend. "Millions of consumers will see their energy bills skyrocket this winter," says Allan Asher, chief executive of Energywatch. "It has never been so important for consumers to make sure they cut their energy bills."

The Carbon Trust is a good first port of call for free, practical advice to help businesses reduce energy use, often achieved using no- or low-cost measures. "Lower energy costs bring immediate savings to the bottom line, increasing profitability," says a spokesperson. "A 20 per cent saving in energy consumption, realistically achievable by most businesses, can have the same positive effect as a five per cent increase in sales."

Gail Rajgor

* For energy efficiency advice:

www.carbontrust.org.uk

* For advice from the gas and electricity watchdog go to:

www.energywatch.org.uk

"Don't automatically assume that by doing your bit for the environment it will cost you any more"