Energy prices have long been a heated topic in the media. With the recent increases in domestic electricity rates, inclusive of the 12.5% rise by British Gas, the Prime Minister has again proposed a price cap on energy bills. Its implementation date is still unknown; however, if the proposal is accepted by parliament, despite the recent doubts that it will not be written into legislation, the ‘absolute’ price cap will last until 2020, with the option to extend to 2023 if required.
For many domestic customers currently paying for expensive standard variable rate tariffs, this is a welcomed action which would result in millions of households obtaining substantial savings in their utility bills. However, for the five million or more small to mid-sized companies in the UK, the impact of these energy bill cuts on their own bills is still unclear.
Over the last three months, wholesale electricity prices have increased by a monumental 15% because of higher import prices from the EU, predominantly due to Germany’s reliance on power generated by coal, a material that traded at around 50% higher than it did in the previous year. These price hikes come at a time when the value of the sterling has dropped in light of the UK’s decision to leave the EU, thus making utility bills particularly expensive for UK businesses at this time.
The Competition and Markets Authority investigation conducted in 2016 revealed that six of the leading energy providers overcharged SMEs by around £500m. This report also indicated the higher profit margins for selling electricity to businesses in comparison to domestic customers, highlighting that businesses too are vulnerable to SVR tariffs – that can be anywhere between 50 to 100% higher than the prices at acquisition.
Even with these findings, the energy market for businesses remains fairly unregulated. Therefore, the responsibility lies solely on companies to secure the best energy deals available on the market, yet navigating the numerous deals offered by energy providers can be somewhat confusing for decision-makers to find the most cost-effective package in the long run.
Whilst the future of energy pricing and introductions of price caps for UK businesses is currently unspecified, there is a clear course of action that businesses can take to guarantee they are receiving the best possible energy deals for their company. This comes in the form of energy procurement services, which are particularly useful for businesses to utilise. By employing their extensive knowledge of the energy market, our specialists can source and review the best deals to suit the requirements of your business, thus ensuring savings within the utility bills of your company. If you want to find out more information about how your business can save money on your utility bills, get in touch with us today.
Article by: Richard Clayton