At the time of writing this, drought-like conditions are gripping Europe, sparking wildfires and causing water shortages. But soon the rain will come, the evenings will arrive much sooner in the day, and we will begin the steady march into winter.
Accompanying the colder months will be sky-high energy bills.
Driven by high demand and low supply throughout 2020 and 2021, gas prices and electricity costs were already worrying consumers when Putin decided to send his armies into Ukraine back in February 2022.
In the first two weeks of the Russian invasion, the prices of oil, coal and gas went up by 40%, 130% and 180% respectively. While those prices have dropped back down, it will be some time before prices reach levels enjoyed before the conflict. After all, Russia controls much of the flow of natural gas into Europe, and with high uncertainty comes high prices.
Consumers, therefore, have one eye on the gas meter and another on their spending as the cost-of-living crisis kicks in. They will feel the pinch. That is for sure. But their collective voice is putting pressure on governments to take action; countries like the UK, Germany, Italy, Spain and France have implemented a windfall tax on energy companies. A proportion of this tax will be given to struggling consumers.
Furthermore, in the UK, consumers are protected – somewhat – by an energy price cap that was introduced in 2019. The energy price cap sets the maximum figure that can be charged to customers on a variable dual-fuel rate for typical usage of gas and electricity for six months.
In short, there is help for consumers.
For businesses, however, who face long nights that can be dark and full of terrors, there is very little support.
Instead, they face:
- Supply chain disruption
- Workforce shortages
- Supply shortages
- Pressure to act on climate change
- High inflation
And now they must add high energy bills to that list. Bills that will easily eat up their reduced profits.
So, what can businesses do?
The UK government recommends that businesses invest in efficiency, replacing traditional lighting with LED bulbs, installing motion sensor technology to reduce wastage, placing solar panels on rooftops, and insulating premises. All excellent and worthwhile activities.
But you should also turn your attention towards negotiating and renegotiating supplier contracts to get the best possible deals. You won’t see prices similar to those of 2018, but your efforts can reduce the impacts of the current increases.
As a further step, you should look at other areas of your spending. Perhaps by making significant savings in printing, telecommunications, waste disposal or IT, you can offset the high bills.
“I haven’t got the time to negotiate contracts or implement energy-saving projects.”
Most companies don’t.
It’s one of the top three reasons why clients like IKEA, Levi and BT engage the services of Expense Reduction Analysts.
We can illuminate opportunities while you focus on running your business.
If you’re curious, the other two reasons are:
- No savings, no fee
- 30 years of experience and knowledge
You’re right to be worried about the oncoming energy crisis. But with our help, you can defeat the tough winter ahead and leave 2022 in a stronger position than you found it.