Fixing your energy prices can feel like a bit of a gamble, but as energy costs continue to mount, it’s one which should pay off. Here are the reasons why it’s worth taking the risk
According to new data from Citizens Advice, gas and electricity prices have risen at three times the rate of inflation - which has risen by 10.2% since October last year. And the charity predicts that by January 2014, the big six suppliers will have increased their gas prices by a total of 37% since October 2010 and their electricity prices by 36%.
As a result of the upwards-only trend, Ecomonitor managing director Brian O’Hagan is advising his customers to fix their energy contracts for at least 24 months, and to start looking around for a better deal regardless of how long a contract has to run.
“It’s not just when you purchase your energy that’s important - it’s when your contract starts,” he warns. “You could fix now, for example, even if your contract isn’t due for renewal for another six to 12 months, and could benefit from some competitive prices despite being in a winter period. It is always best to find out what can be achieved.”
Independent retailer David Knight of Knight’s Budgens of Hassocks, West Sussex, has done just this. “Our contract is due for renewal this month. However, we had already started to monitor the market five months ago so that we could fix the price early. This turned out to be very lucky as almost all of the big six energy suppliers raised their prices in November,” he explains.
In other words, it’s important to take into account what period you are buying for, not just when you choose to agree your new contract.
If your agreement is due for renewal within the next three months, you may have little choice in when you choose to agree a new deal, but if it is further away then it’s definitely a good idea to get a good view of what is out there. If you don’t agree a new deal before your old one expires, you may find yourself on a shockingly high rate.
If, however, your agreement is not due for renewal until February 2014 or later, for example, you could still agree a new deal now, ready for it to start next year.
There are some pitfalls to watch out for when fixing a contract, though. Shopping around is important. If your contract is nearing renewal, don’t get pressurised into securing a new one with your current supplier just because they’ve called you.
“Be careful of anyone calling you saying they are ‘calling on behalf of your supplier’,” says O’Hagan. “Take their full name, telephone number and e-mail address first. There are a number of rogue brokers pretending to be suppliers and they may try to sell you a new contract, often at very high rates, and they are very difficult to break free from.”
If you compare prices directly, make sure you are comparing like for like. Some suppliers might not fully fix prices, or may exclude some chargeable elements.
You must also read any contract carefully before signing. You may get a better quote on prices per kWh consumption, but be aware that there may be clauses that allow the supplier to pass on increases in distribution costs and it is always better to ask about this in advance.
So how long should you lock in your energy deal? “If possible I would always look to fix for at least two years,” O’Hagan says. “While your bills will initially be a little higher than if you’d only fixed for one, it’s probably going to be worth it in the long run as energy prices only look set to keep on rising.”
Premier retailer Dan Cock at Whitstone Stores in Holsworthy, Devon, agrees: “These days, fixing for as long as you can is probably the best course of action. Even if your contract is not up for renewal immediately I think it’s always a good idea to keep abreast of what is happening with energy prices and which suppliers are offering what. The suppliers have pledged to be more understanding in their treatment of small businesses going forward. Let’s hope this is the case.”
How to save energy in 2014
As the countdown to 2014 begins, now’s the perfect time for independent retailers to set themselves energy-saving goals for the year ahead. As part of the Pay Less, Use Less campaign, npower is sharing some simple steps retailers can take to ensure the new year gets off to an energy-efficient start.
Refrigeration Ensure all units are well maintained, clear of any debris which may restrict airflow and positioned away from radiators. A failure to do this can lead to fridges consuming much more energy than required.
Timing Check that clocks on heating systems are set to ‘on’ only when the business is open. Doing this could save nearly 30% in costs.
Service boilers Inefficient boilers can waste up to 35% of energy compared with modern models. Service boilers regularly to ensure they run efficiently, especially during the colder months.
Check thermostats Turning the temperature down by just 10C can achieve savings of 8%. During the winter, 210C is the recommended temperature for shop environments. However, heating can often be set to 190C as internal heat gains from equipment and lighting bring the temperature up to a level most employees find comfortable.
Switch off Turn all machinery and equipment off at the end of each working day. For example, shop lights are frequently left on overnight, but switching them off when not in use can save up to 12%.
Look at lighting Switching to LED lamps can cut lighting energy costs by 50%. More long-term energy efficient lighting and automatic controls can reduce energy consumption by as much as 80%.
Phil Scholes, sales and marketing director at npower SME, says: “We know cost remains a key issue for SMEs so we hope that by sharing these simple tips, businesses will be able to make significant savings in the year ahead.”
For more information on how npower can help your business save energy, visit www.npower.com/business/saveenergy.