The price companies are paying for energy has almost doubled in the past five years, yet most small to medium sized enterprises (SMEs) have never changed supplier and don’t know how much they are paying anyway, writes Adam Bernstein.

Energy industry regulator Ofgem has said it wants to ‘radically overhaul’ the energy market so customers can compare prices easily and start receiving the benefits the free market was supposed to deliver. But those changes could be a long time coming and you don’t need to wait for them to start reducing your bills.

Unlike consumers, businesses cannot change supplier whenever they like. They are tied into contracts that can only be terminated or renewed during a specified period (sometimes as little as 30 days) that can be as much as 120 days before the end of the contract.

If you miss that opportunity, the contract will be rolled into a new contract at a rate of the supplier’s choosing – and that will be more expensive.

At the very minimum you should put the start and finish dates of the notice period of your current contract into your diary.

Under rules introduced by Ofgem in January last year (although they only took effect in April this year) energy companies must give notice of tariff changes and end of contracts to domestic users and micro-companies (under 10 employees with annual gas usage under 200,000kWh or electricity under 55,000kWh). Larger companies have to fend for themselves.

If you want to change your business energy supplier there are specialist consultancies that will help you and you can use comparison websites such as

moneysupermarket.com, gocompare.com and uswitch.com.

However, comparison websites will not run online searches for businesses that leave you to pick the best deal from the options listed, as they do for consumers. Instead, they require you to make contact and will let you know what is, in their opinion, the best deal for you.

One of the reasons for that is because the rate businesses pay is based on credit scores.

Some suppliers refuse to supply businesses with a credit score of less than 46/100. If your score is above that you can get a better rate because there is more competition for your business.

The length of the contract also helps determine the price. The longer the contract the higher the price now, but you are hedging against rises in unit prices in the future – and you might consider it a safe bet they will increase.

If you can organise it so your machines do most of their work overnight you could also save money because electricity is cheaper off-peak. Companies that do not use much electricity can be better off with a low standing charge but a higher unit price.

If you move, you leave your old energy supplier behind with the premises. But you must enter into a formal energy supply contract with your new suppliers or you will be charged ‘deemed’ or ‘out of contract’ rates – and they can be two or three times higher than a formal energy supply contract rate.

If you play your cards right and keep switching suppliers you can take advantage of ‘new customer’ rates offered by the energy suppliers as they try to win business. These rates are designed to attract customers on the basis that a good proportion of businesses will stay with the supplier for a long time and will end up on more expensive tariffs. You don’t have to be one of them.

Some energy suppliers are pushing businesses to install so-called ‘smart meters’, so you only pay for the energy you use. Smart meters are in their technical infancy and while they can help your cash flow, not all suppliers support them, which will restrict your options. You might also like to bear in mind that they use a built-in mobile phone SIM to relay your energy use figures – and the SIM can just as easily be used to cut off your supply if you don’t pay a bill.

There are no dual fuel deals for businesses, although using the same supplier for gas and electricity can have accounting advantages. There can be savings by paying by direct debit – at the time of writing EDF offered 2% and EON 4%, for example.

Moving energy supplier is not difficult or time consuming. The new supplier will do much of the work for you and make the switch.

THE COST OF INERTIA

Business energy costs have almost doubled in the past five years, yet only 15% of small businesses even know what rate they are paying. A good price for electricity at the time of writing is just under 10p / unit (kWh) but some suppliers are renewing contracts at around 16p / unit and out-of-contract (deemed) rates can be as high as 30p / unit.

According to a 2011 Make It Cheaper survey (Make It Cheaper are specialist energy consultants):

• 54% of businesses have never switched electricity supplier
• 18% think that they cannot switch supplier

According to a 2010 Ofgem survey:

• Only 7% of 500 businesses monitored switched electricity supplier in the past 12 months (compared with 18% of domestic users)
• 79% of businesses said they had not had (or could not remember receiving) a renewal letter