8 questions you should ask your small business energy supplier before signing the contract


Energy Blog 3


















Regardless of the type of business, energy will always be required, used and paid for. However, our research shows that as many as 1 in 5 of small businesses that we talk to don’t even realise that they’re locked into a contract, let alone understand the terms of that contract.

Small businesses often don’t have the time to sit down and understand their gas and electricity contract or even assess the available energy contracts on the market. However, understanding the available energy contracts is a quick and easy way to spot opportunities to save money which will help the bottom line.

Asking a few questions of your energy supplier can quickly help you find opportunities to save money. If you end up signing a contract that isn’t right for your business, you could end up paying more for your energy than required.

Asking the right questions to energy suppliers before signing up to a contract will also ensure your energy bills are as low as possible.

Having your business on the best energy contract available will also ensure you’re not paying too much for your energy consumption and also help towards implementing energy saving and energy efficiency initiatives.

It may seem like a lot of work, but there are real savings to be had by comparing the contracts offered by energy suppliers. We recommend finding out when your energy contract is up for renewal and book some time at least 5 weeks before to look at available offers.

When comparing contracts, we recommend you asking the following questions:

  1. What costs are included in the unit rate?
    Some suppliers offer a fixed price but don’t always advise if all costs are fixed. Entering into a contract with a fully fixed rate will offer price protection from market movements and provide budget certainty. If budget certainty and protection from the market is important to your business, a fully fixed price may be the best option for you. However, having a unit rate with some elements that are not fixed may be best for your business depending on how you consume energy. Usually contracts that don’t have a fully fixed unit rate will be cheaper but will leave some elements exposed to the market. Before progressing with any contract it is important to be aware of exactly what is included in the unit rate.
     
  2. Which costs are passed through?
    Passed through costs are elements of your unit rate which are not fixed. Passed through costs will be charged to you separately on your bill and will often be a variable cost. Passed through costs may be beneficial if you have control over the times in which you consume energy, otherwise passed through costs could result in you paying more during peak periods.
     
  3. What term is the agreement for?
    This is a personal decision but be clear with the supplier about the length of contract you are looking for. Usually energy suppliers will offer a maximum term of 5 years, however historically contract lengths have been known to be triple this. 
     
  4. Does the supplier offer a cooling off period?
    Many suppliers don’t offer a cooling off period so you need to be 100% sure on your contract before you return the signed copy back to the supplier. Once signed, there is often no negotiation.
     
  5. What are your termination rights?
    You can request the termination rights before you sign your contract, this just ensures that you are fully aware that you understand your rights.  Often, once you have signed a contract you are then locked in for the term.
     
  6. Does your supplier offer a blend and extend option?
    A blend and extend extension of your existing contract for a longer duration that uses a unit rate based on the average between your current contractual rate and the current available market rate. This option helps safeguard you if the market drops while you are within your existing contact.
     
  7. Can your supplier install a smart meter free of charge?
    A smart meter has many benefits. For example, the meter will automatically record meter readings meaning your supplier can start charging you for your actual consumption rather than estimating. The smart meter will also provide you with live consumption data helping you understand when and where you are consuming the most energy. 
     
  8. Have you thought about a free energy broker?
    If you don’t feel that you have time to spend understanding the different energy contracts and each suppliers USP’s, there are some free of cost energy brokers available. Advice should be impartial and they can search the market and present to you their findings based on your requirements.

It should take less than an hour to ask these questions and yet you can potentially save thousands over the period of your contract. Energy becomes a hidden cost that can increase without you being aware. Don’t miss an opportunity to save.

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Download our FREE Energy Efficiency Guide for SMEs and discover more tips on how you can easily and quickly reduce the amount your business spends on energy

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