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Business Energy Guides Business Energy: The ultimate ‘how to’ guide to switching and saving 16th August

We know business energy isn’t the most interesting topic in the world. Switching energy supplier isn’t what gets anybody out of bed in the morning. But it’s important. And it’s not as complicated as the energy industry has tried to make out. So we’re going to break it down, honestly, into simple stages…

1. Get clued up before you start

How do businesses buy energy?

It’s quite different to how you do it at home.

Domestic energy

  • You have a rolling contract with no end date
  • Prices can go up at anytime (also down, in theory!)
  • You can switch basically whenever you want

Business energy

  • You have set contracts (typically for 1, 2 or 3 years)
  • Prices are locked-in for the life of the contract (which helps with business planning)
  • You can only switch at the end of a contract

Why should I switch energy supplier?

You’ll get much better savings if you switch rather than negotiate with your current supplier.

Don’t play the negotiation game

What many business customers do is wait to get a renewal letter from their current supplier, offering a new contract. It will nearly always be a lot higher than than what they were paying previously (the supplier is hoping they don’t notice).

Then they telephone their current supplier to haggle, when the supplier will inevitably back down and make a lower offer much closer to what they were paying previously. This little charade means that those businesses are not totally getting ripped off. However it also means that they are not getting the best price in the market; just what their old supplier thinks they can get away with.

If you want to pay the best price, then you need to switch

Also, while a good price is critical, you might also find a new supplier with better customer service, a great website, more accurate bills, and who offers clean or renewable power. Believe it or not there are new modern suppliers who do offer those things!

Is it risky to switch?

There is zero risk of being disconnected, and a modern supplier will keep you informed.

You won’t get unplugged

Lots of people think that your old supplier needs to come and unplug your meter, or even dig up your cables. And that the new supplier needs to turn up at the same time to plug their power in.

All that actually happens is, on the date your contract changes, various energy industry computer systems are updated behind the scenes to make sure the right company sends you a bill in the future.

It takes 21 days or less

By law you must be switched over in 21 days, but modern suppliers will try and do it in more like 12.

Make sure you’re not left in the dark

If you’re switching between old fashioned suppliers, there can be a bit of a black hole of communication. But switch to a modern supplier, and their customer service will keep you informed throughout.

When can I switch?

You can only switch when you’re out of contract, and you have to give notice at the right time (unless you’re a micro business).

Make sure you don’t get of out of contract

If your business energy contract runs out, your supplier may automatically roll you into another contract (probably with less good rates), or you'll go onto 'deemed rates', which are typically 50% higher than market prices.

You obviously want to avoid this, as it's like throwing your business’s money away!

Try and give notice at the very start of your switching window

If you want to switch supplier, to avoid any days on deemed rates, make sure you give them notice as soon as you can.

You have a ‘switching window’ at the end of your contract when you can tell your current supplier that you want to leave.

If you have a 90 day notice period, give them notice 90 days from the contract end date. If you have a 60 days notice, give notice at -60 days. And so on.

Unless you’re a micro business; then you can give notice whenever you want!

Read Squeaky’s guide ‘Am I a micro business?’

You are a micro-business if:

  • You have fewer than 10 full-time employees and an annual turnover or balance sheet of less than €2 million (about £1.75 million)
  • You use no more than 100,000 kWh of electricity per year
  • You use no more than 293,000 kWh of gas per year

If you are a micro business then you only have to give 30 days notice, and you can give it at any point in your contract.

So you could give notice only one day into a new 1 year contract! (Although you’d have to wait 364 days to actually be able to switch away :-(

Help! I’m out of contract! What should I do?

You could be paying up to double, so you need to get onto a new contract, fast!

Take deep breaths!

If you are out of contract, you will still be getting electricity, but you will be paying ‘deemed rates’, which are often far more than the current market rate.

This can be a really significant cost for a business which is easily avoidable. (You could get kudos from the boss for sorting this out!)

Stay calm and make a plan

  1. Find a new supplier
  2. Ideally find a modern new supplier who can get you switched over more quickly than the legal requirement of xx days
  3. Take steps to not get out of contract again. Set yourself reminders!

2. Find a new supplier

How can I find the best energy deals?

The pros and cons of brokers, price comparison websites, and going direct. Screen Shot 2018-08-17 at 10.52.00

What information do I need to get a business energy quote?

Just find your renewal offer or last monthly bill - everything you need should be in there.

  • By law energy companies have to give you a quote with just…
  • Your business postcode
  • Your recent electricity usage
  • Your contract end date
  • It will make your quote more useful if you also supply…
  • Your business name
  • The MPANs of the meters you want quotes for (what’s an MPAN?)
  • Your email address and/or phone number

How are business energy quotes calculated?

Most are calculated monthly. But you can find a better deal if they’re calculated using today’s live prices.

Most suppliers use a ‘price book’. That means they have a set price for businesses of your size in your postcode, which they’ll recalculate about every month. It means some lucky businesses pay a bit less than they should, but that others pay more than they should.

Some modern suppliers like Squeaky instead calculate a personalised quote for you with that day’s ‘live’ prices. Their quotes are only valid for 24 hours, but you can refresh them whenever you want, and see how the market is moving. If the market is moving up, then you can buy now to lock in savings for 1 or 2 years.

How can I tell if I’ve found a good energy deal?

Make sure you compare to the prices on your renewal offer, not what you’ve been paying!

Different suppliers may provide their quotes in different ways, so it can be difficult to compare them ‘like for like’.

  • Suppliers have different daily standing charges, and some don’t have any (what’s a standing charge?)
  • Suppliers have different prices per kWh (what’s a kWh?)
  • You might choose to have different rates for day or night
  • Your energy usage may vary considerably month to month or in different seasons

Find a recent bill

The best idea is to find a recent bill, and do a simple calculation to figure out what your new suppliers would charge you for the same amount of days and energy.

Remember though, your bill will be based on the prices from your old contact that was signed 1, 2 or 3 years ago, and the wholesale price may have changed significantly.

Make sure you compare against your current suppliers prices in their renewal letter, not what they were charing you in the past.

3. Swap contracts

Got a quote from a new supplier that you’re happy with? These are the steps you need to take to switch to them.

Terminate your old contract

If you have to give 90 days notice, make sure you inform them 90 days before the end of your contract. If it’s 60 days notice, do it a -60 days.

Sign your new contract

Modern suppliers do this online. Otherwise, dust off the fax machine!

Set-up payment for your new supplier

Some suppliers will send invoices, others use direct debit from your business bank account.

Wait for the switch to happen

Your old and new suppliers talk to each other and sort out billing periods and switchover dates. A good modern supplier will keep you informed too.

Do an opening meter reading

And then keep doing regular meter readings is the best way to avoid estimated bills.

Other useful guides

Read Squeaky’s guide ‘How to find and read your electricity meter’

Want more detail? Take a look at this detailed timeline for switching to Squeaky.

Glossary of business energy terms →

*kWh

A kilowatt hour (kWh) is a measure of how much energy you’re using. Honestly you’ don’t need to know more technical detail than that - as long as you know where to find out how many of them you used last year.

Read Squeaky’s guide ‘How to read my electricity bill’

MPAN

An MPAN is a Meter Point Administration Number - a unique 21 digit number for each of your business electricity meters. It might sometime be called something else, like an electricity supply number, but musn’t be confused with a customer reference number or your meter serial number. Just look out for the 21 digits!

Read Squeaky’s guide ‘How do I find my MPAN?’

Standing Charge

A Standing Charge is a bit like line rental on a phone contract. It’is the cost of having an electricity or gas supply – then you pay for the energy you actually use on top.

Deemed Rates

Deemed rates (also known as out of contract rates) apply when you haven’t renewed your energy contract or switched supplier at the end of your contract period. Typically they are extortionate! It's important to know when your contract ends and it’s time to switch, otherwise you could be paying double for your electricity if you roll over (ouch!).

Fixed Rates

Fixed rates are a type of electricity tariff that provide a locked-in rate for the energy you use throughout the length of your contract. Some suppliers just fix the kilowatt hour (kWh), but at Squeaky, we offer a ‘fixed fixed’ rate that doesn’t fluctuate at all – good news for budgeting and accounts.

Change of Tenancy (COT)

A Change of Tenancy means your business has moved, or is moving, into a new premise. It’s important to get the contract sorted as soon as possible to avoid going on to deemed rates with the current supplier. Moving premise is the perfect opportunity to shop around and find the best deal for your business.

Climate Change Levy (CCL)

The Climate Change Levy (CCL) is an environmental tax charged on the energy used by your business. You’ll be able to find this easily on your electricity bill in the price break down section.

Energy Distributor

Electricity distribution companies look after the grid; the infrastructure that gets electricity from the generator to your property. So cables, power boxes, etc. If a line falls in a storm, it is the energy distributor that’s responsible for fixing it, not the supplier. You cannot switch your electricity distributor - they own and operate their own networks.

You can check who your distributor is here.

Energy Supplier

Your energy supplier is the company that sends you your bill every month - this is what you can switch. They track your usage and calculate your bills, etc. The only hardware they are responsible for is your meter.

Half Hourly Meters

Businesses (like factories) that use a lot of electric have HH (half hourly) meters. As you might have guessed, a half hourly meter is an energy meter that monitors the amount of electricity used by a business within a half-hour period.

Non-Half Hourly Meters

But if you’re reading this, you probably don’t have a half hourly meter; you probably have an NHH (yes, you guessed it, non half hourly) meter which are read manually, or automatically with an advanced meter. It’s good to know, just in case someone asks.

Smart Meters

A smart meter means you don’t need to read your meter as they allow you to review your usage and spend in real-time via a device fitted within your business premises. You might be offered one as part of your switch, but lots of people are preferring to wait until the next generation of meters have got over any teething problems.

Advanced Meters

An advanced meter allows for digital, remote meter reads so a supplier can monitor your consumption and give you an accurate bill each month. You might already have one but you don’t need to worry too much about them - they are getting phased out this year to make way for the snazzy new smart meters.

Standard Meters

The majority of business owners have a standard meter – it’s pretty standard. This means you have to submit meter readings monthly or quarterly to your supplier. Sometimes they send an official meter reader round to do it for you.

Switching Window

If you don’t qualify as a micro business (see below), you must give your current provider notice of cancellation within this pre-defined time period, which typically starts 30-90 days before the end of your contract. This information should be on your bill; check with your supplier if it isn’t. Switching windows are a great chance to shop around for a better deal, so make a note of it in your calendar.

Micro Business

Micro businesses do not have to adhere to switching windows - they can give notice to their current supplier at any time and switch in 30 days, allowing for far more flexibility. If you spend less than £12,000 PA on electricity and/ or gas, and have a turnover of less than £2 million, there’s a strong chance you qualify. Check our guide below for more information.

Read Squeaky’s guide ‘Am I a Micro Business?’

Renewable Energy

Energy from renewable sources, i.e. that don’t take millions of years to replenish, as per fossil fuels. What’s often unclear is that renewable does not necessarily mean clean or eco-friendly. Many governments include burning biomass as a renewable source, which has myriad negative effects for both the environment, and public health. That’s why for our products, we prefer the more strictly defined…

Clean Energy

Energy that is sourced sustainably, with minimal social and environmental impact. In practice, that means wind, solar, and hydro energy. We also support the implementation of a clearer labelling system, so energy consumers can tell the difference.

Read Squeaky’s blog ’Renewable Energy’s Dirty Secret’

Tariff

The rate at which you pay for your energy. This typically appears as a letter on your bill; you’ll have to reference your suppliers website for what this translates to. Termination Letter

The letter you must provide your current supplier with in order to cancel your contract. We’ve made a template here. If you plan to send it by post, remember to use recorded delivery.

Estimate

If you don’t submit regular meter readings your bills will be calculated by estimated use. This is typically based on previous years, or the usage of similar businesses. There are all kinds of issues with using estimates, so best to avoid if possible.

Dual Fuel

Dual fuels tariffs don’t really exist in business energy. Some suppliers might do you a deal to get both your electricity and gas business, but you will be buying two separate products. For the best prices it still pays to shop about.

Open Energy

With Open Banking poised to revolutionise financial services, we think it is time for the energy industry to adopt a similar approach that we’re calling, Open Energy. Current methods for accessing data are inefficient and expensive, restricting innovation and leaving consumers picking up the cost. By working together, we can change this… more on this soon.

 

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New to business energy switching? Why not check our impartial guide.

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