News that the ‘Big Six’ energy companies were singled out for criticism by industry regulator Ofgem recently will not come as a surprise to many of their commercial customers.
Despite ongoing energy price rises, it seems that many customers feel let down by poor service levels, with increasing number of consumers stating that they are ‘very dissatisfied’ with the service they receive from their energy provider.
Price is often the major factor for business users, and so many are prepared to put up with poor customer service for the sake of what they see as a good deal, particularly if their business is a large energy user.
As someone who deals with energy companies and their clients every day, I don’t believe that anyone should put up with poor service. In fact, as a business user you are likely to be a valued customer, even if the level of service you receive doesn’t reflect that fact. So, remember that you are in a position of strength because energy firms really want your custom.
Find the finance
Energy conservation is a big deal for companies and the government, which has strict EU targets to meet. As a result, there are some funding schemes currently available that are worth investigating. For example:
The Green Deal(www.gov.uk/greendeal-energy-saving-measures) in effect helps companies to borrow against future savings in energy consumption in order to finance energy-saving initiatives, such as insulation or more efficient lighting and heating equipment.
The Energy Efficiency Financing Scheme, run by Siemens Financial Services and the Carbon Trust, allows businesses to invest in energy-efficient technology with payments that can be offset against the energy savings made from using the equipment.
The Enhanced Capital Allowance (ECA) Schemeis part of the government’s programme to reduce energy consumption. The scheme provides businesses with enhanced tax relief for investment in equipment that meets specific energy-saving criteria. It enables companies to offset the cost of equipment against their taxable profit as a 100% first-year capital allowance.
Audit your energy use
If you haven’t done so before, it’s advisable to carry out an energy audit of your company. Start by monitoring what and here energy is being used – or wasted. For example, are computers, photocopiers, heating or lights being left on when there is nobody around? There are also other simple changes you can make to cut energy consumption:
Turn down the heat:
are thermostat settings too high in your offices or on the factory floor? For every degree your thermostat is turned down, an 8% saving is achieved.
Follow my leader:
appoint an ‘energy champion’ who can take responsibility for reducing and monitoring how energy is used.
Shine a light:
lighting is a significant cost for many businesses and energy Revisit your contract saving technology has come a long way. You could invest in energy-saving light controls that switch lights off automatically when they aren’t needed, or simply buy some energy saving LED bulbs or fluorescent tubes.
One major way of saving money that’s surprisingly simple and frequently overlooked is to review your contract. I am often surprised by just how many businesses are either on the wrong tariff or on the incorrect VAT rate (this varies for different types of business).
Even if you are locked into a contract for two or three years, if you were given the wrong advice initially and have been put onto a contract that is penalising you (for over-use or under-use), you may be able to renegotiate your deal and potentially engineer a refund.
VAT is another issue that confuses companies. We have come across a significant number of businesses that have been put on the wrong VAT rate, subsequently paying more than they need to. Again, if this is the fault of the energy company (and it often is), you should be able to claim a refund, which could add up to thousands of pounds over the course of a year. Brokers who know the market and are used to dealing with energy providers are best placed to deal with this for you.
Of course, it’s preferable to be in a good contract from the start, rather than having to dig around to find out where you have been overcharged. The optimum time to investigate a new contract is around six months before the current one expires. Don’t be afraid to state your terms and negotiate – or appoint a broker to do it for you.
Energy is a major financial outlay and an absolute necessity for any business. If you are looking to reduce costs, improve margins or finance growth, looking at your energy costs is a good place to start. Despite energy providers’ poor reputation for customer service, being a customer gives you a degree of power when negotiating with your provider, so use that influence to ensure that you get a better deal.
James Longley is a Director of Business Energy Consultants (www.bizenergy.co.uk). He researches the energy market and negotiates on behalf of the hospitality industry and facilities managers to find the most competitive energy deals on the market.