Managing business energy costs in an uncertain market

The price you pay for energy for your business can vary across suppliers and the type and size of your business, but covers a range of costs including the wholesale energy cost (the cost to buy energy), network costs (the infrastructure to transport energy), and environmental costs (government decarbonisation schemes). Typically, wholesale costs can be about 40% of your electricity bill and about 60% of your gas bill, but exact percentages will vary.

In April, network costs are increasing to upgrade energy infrastructure. Wholesale energy costs are volatile and will continue to be affected by the situation in the Middle East.

Our understanding is that the majority of businesses are not currently exposed to immediate price increases as contract lengths are starting to return to 3 to 5 years in length. Based on current evidence, we expect less than 10% of businesses to recontract in March and April, with a further 10-12% currently on deemed contracts, and a further 10% likely to recontract in May to July.

However, if your fixed price contract is coming to an end, you will need to negotiate a new contract with your supplier.

Talk to your supplier about your contract options

If your current contract is coming to an end, talk to your supplier about what options are available.  If you have an energy broker, they can do this for you.

Consider your options

Ask suppliers what contracts are available and consider both short and long-term options. It may be better for you to temporarily stay on deemed or out of contract rates if the current longer-term contract offers are high. 

Things to be aware of

When thinking about your contract options, you should be aware that:

• suppliers may require security deposits because of greater risks of businesses defaulting on payment
• energy suppliers are not obliged to offer businesses a contract and offers may be harder to find
• you shouldn’t feel pressured into signing a contract and there is no cooling off period, so check the terms and fees beforehand
• if you discuss a contract over the phone, you should ask for it in writing before agreeing it
• you can avoid fraudsters by verifying unexpected calls. If in doubt about the caller, stop and check their details

Keep in contact with your supplier

Your supplier must treat you fairly and bill you accurately based on your meter readings. To ensure you are only paying for what you use, submit regular meter readings or get a smart meter.  It is also important you keep your contact details up to date so that you receive your bills.

If you are having problems managing your bill, you should talk to your supplier or your energy broker. Your supplier can also offer you advice on reducing your bill.

Get help if your business cannot afford its energy bills.

Ways to get help 

Managing energy for your business is just one of many competing demands. There is support available to help you. You can contact:

• reputable energy brokers who can talk to suppliers for you
• trade bodies, consumer groups and charities who can offer detailed advice and support
• the Energy Ombudsman for small businesses, who can help if you get into a dispute with your supplier and you cannot resolve your complaint; if your dispute is with your energy broker, they will provide details of their redress scheme provider to contact

You could be eligible for financial assistance or schemes that help you reduce energy costs:

Find business energy efficiency grants and schemes.  

Get advice on business recontracting. 

Find out more about the costs included in your bills.