How much do prices differ for businesses?
The prices that suppliers charge for business electricity, commercial gas and other utilities can vary massively. It’s not unusual for one business to be paying two or three times as much for their gas and electricity as their neighbour or a site nearby, owned by the same client. Over the recent years we have seen rates for electricity ranging from over 30 pence per kilowatt hour to less than 6p per unit.
What rates are available to my business?
Many energy suppliers require your business to achieve a minimum credit rating – so the better score you have, the more options will be available to you. New businesses or those with poor credit can be limited to only 2 or 3 possible suppliers. Other variables which can determine the cost of business electricity for each business include: postcode, business type (sole trader, LTD, etc.), sector (retail, manufacturing, etc.), payment terms, and annual consumption, including seasonal and time of day variations meter profile. The first two digits in a meter reference number range from 00 to 08, which is a classification related to consumption (most small businesses are 03 or 04 profile).
Direct debt is the best and frequently only option if you wish to achieve the best possible price.
Who are the ‘Big 6’?
The press and Ofgem will frequently talk about the Big 6, how they are dominating the market, limiting competition and so on. But at first glance there appears to be more than big 6 players in the market. However when you realise that British Gas and SSE have at least 6 trading names each, it becomes clearer that some of the competition is an illusion.
- Eon (also known as Powergen)
- Npower (also known as RWE)
- Scottish & Southern (also know as SSE, incorporating Southern Electric, Scottish Hydro Electric, SWALEC, Atlantic Electric & Gas.)
- Scottish Power
- EDF (incorporating London Energy, SWEB and Seeboard)
- British Gas (incorporating Scottish Gas, Electricity for Business, Bizzenergy, Enron and Electricity Direct)
How do I know that your prices are the best deal for me?
Lumens Business Services are 100% independent and work with all energy companies. In some cases the rates we have from suppliers have been negotiated and are exclusive to our company. We’re committed to offering you the lowest price and will always present the best available business energy deals for you, no matter what commission we are being offered by suppliers.
How much does your service cost?
We provide a free service and only receive commission from suppliers once we have successfully set up your new contract with them.
Why do you need to see a copy of my bill?
Your business gas or electricity bill shows us a unique meter reference number (10 digit ‘MPR’ for business gas or a 21 digit ‘MPAN’ for business electricity) which we need to confirm your consumption. It also tells us what kind of meter you have, which supply area you are in and what kind of electricity/gas user you are. It ensures that we quote you the correct energy prices.
What does a meter reference number (MPAN/MPR) look like?
The number will start with an ‘S’ and is usually printed on a bill.
What if I don’t know my contract end date?
If you are unsure whether you are currently in a business energy contract or don’t know when it ends, you can find out from your supplier by sending them a contract checking enquiry or authorise us to find out on your behalf.
What is a rollover contract?
A rollover contract (also known as evergreen, assumptive renewal) is ‘an agreement between two parties that is automatically renewed (rolled over) after each completion – or maturity period, until cancelled by either party.’ Unlike household energy contracts, nearly all business electricity and gas contracts are evergreen, meaning they automatically renew themselves if you don’t terminate them with a letter of notice. Some suppliers renew over 90% of their customers in this way, rolling them over on to new not-so cheap energy prices when often the customer is unaware this is happening.
How do I avoid getting rolled over?
Each energy supplier has different, and often complex, rules about renewing your business electricity or gas contract with them and they will usually write to you anywhere from 120 days before your contract end-date to inform you of their intention to roll you over. This letter often triggers the opening of your renewal window, putting the onus on you to terminate the contract in writing before the window closes again which – in many cases – can be as little as one or two weeks later. To find out which energy supplier’s terms & conditions apply to you, call us on 0333 344 3205.
Does it make any difference if I’m a Not-for-Profit organisation?
Sadly, businesses in the eyes of utility companies include all not-for-profit/community buildings such as churches, village halls and Scout huts. Still, this doesn’t mean they can’t compare business energy prices and switch to the cheapest electricity supplier. Plus, they may also be eligible for a lower rate of VAT and Climate Change Levy exemption. The VAT alone can often make a significant difference on electricity and gas bills!
Are there any other types of contracts to be aware of?
The other most common types of contracts for businesses are ’28 Day’ and ‘Deemed Rates’.
What is a 28 Day contract?
Businesses that do not compare energy prices or have not attempted to switch energy suppliers since the market was de-regulated in the 1990s often find themselves on 28 Day supply contracts. The energy prices charged for these contracts can go up and down with the market and are rarely competitive. As such, Lumens Business Services would always recommend a business to switch on to a competitively-priced ‘fixed-rate, fixed term’ contract for a minimum of a year, even with the same supplier. Thankfully, as the name suggests, switching to cheap business electricity can be carried out anytime after giving 28 days notice.
What are Deemed (or out-of-contract) Rates?
These rates are often the worst and usually apply to businesses that are either new to the property or have terminated a contract but failed to switch to a new supplier. The good news is that, like 28 Day contracts, there is only a maximum of 28 days notice required to switch onto the cheapest electricity rates.
What is Half-Hourly / 100kW supply?
Half-hourly meters are for energy-intensive businesses whose average peak electricity demand was greater than 100kW in any three months of the previous year. There are two simple ways of checking if you are a half hourly customer: usually, a half hourly meter will have a communications link so that it can be read remotely on a daily basis; or, if you check your meter reference number on your bill, you’ll see that it begins 00. We have a specialist team that arranges for the cheapest electricity prices to be sought from suppliers that cater for the half-hourly market.
What if I’m new to the property?
If you have just moved into a property, you will be supplied by the same business electricity supplier that the previous tenants used. However, this supplier is likely to be charging you out-of-contract rates which are significantly higher than average. It is important that you arrange a new commercial electricity contract for your business as soon as you can after moving in. If you call us with your new address, we can find out who your current supplier is, your meter serial number, compare energy prices and advise you on the best option going forward. NB A meter serial number (or ‘meter ID’) is different from a meter reference number. It is the 9 or 10 digit reference located on the actual meter itself that usually appears in the following format A12B 34567.
Can you install a meter in to a new site?
Yes, we have experience in arranging for the installation and upgrading of meters for clients. This applies to both gas and electricity meters, where you’re dividing a unit in two and what to meter each part separately (for example, if you have tenants). We can also help if you’re upgrading a site and need a maximum demand or half hourly supply to cope with the increased usage.
Do I have to do anything to switch supplier?
The key thing is to send a letter of termination to your current electricity supplier to avoid getting rolled by them. Because each supplier has different rules about terminating, the easiest way by far would be to let us guide you through the process.”.
What happens if my supplier objects to my transfer?
Giving sufficient termination notice should prevent your current supplier objecting to you leaving them. However, electricity suppliers may object on the grounds of outstanding debt or existing contract. Our service is geared towards making sure every switch to cheap business electricity suppliers happens smoothly and successfully.
How long will it take to switch supplier?
It takes approximately 4-6 weeks to switch suppliers and we will oversee the whole process on your behalf. Rest assured, your supply cannot be cut-off as a result of switching! Lumens Business Services will keep you up to date at each stage and you will have the direct phone number of your advisor to ask any questions. Furthermore, we will also be there for you throughout the term of the contract and, significantly, offer you a renewal reminder to ensure that you always have the freedom to choose the cheapest business electricity / gas option at the end date.
What rate of VAT should I be charged for my gas or electricity?
VAT on electricity and gas for business is normally charged at 20% (as of January the 4th 2011.) However, some businesses will meet the ‘De minimis’ requirements and then would be billed at 5%. This means using an average of no more than 33 kwh per day (1,000 kwh per month) for business electricity and/or less than an average of 5 therms or 145 kwh per day (150 therms or 4,397 kwh per month) for business gas. if a business falls within this criteria they will only attract the 5% VAT on gas and electricity bills.
What is the Climate Change Levy?
The Climate Change Levy (CCL) is a Government tax, introduced in 2001, on the use of energy by businesses, agriculture and the public sector which applies to both gas and electricity prices. The aim of the levy is to encourage industry, commerce and the public sector to improve energy efficiency and reduce greenhouse emissions. Current Electricity CCL is 0.554p per kWh and Gas CCL 0.193p per kWh.
Do any types of business qualify for 5% VAT and CCL exemption?
- Residential / domestic buildings – including accommodation for children, the armed forces, care homes, rehab centres, hospices, monasteries & nunneries.
- An institution which is the sole or main residence of at least 90% of its residents – except hospitals, prisons or similar institutions, hotels, inns or similar.
- Self catering holiday accommodation, caravans & houseboats.
- Charitable organisations.
All of the above will qualify for a reduced rate of VAT on gas bills and electricity bills.