Check your contract dates to avoid price hikes

Business owners will be hit by far bigger utility price rises than consumers, so watch out. That’s the message from cost consultants Make It Cheaper who are specialists in the […]

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By Sumit Bose

Business owners will be hit by far bigger utility price rises than consumers, so watch out. That’s the message from cost consultants Make It Cheaper who are specialists in the SME sector.

Recently some business bill payers have seen their fixed price tariffs doubling as they come up for renewal at the end of the contract and with two of the Big Six announcing huge price rises already this year, the fear is things will only get worse.

Jonathan Elliott, managing director of Make It Cheaper said: “Because the energy suppliers buy their electricity and gas in advance, they are having to hedge for a minimum of 12 months fixed term. But you also need to add into the equation that the energy companies are competing for hard to win new customers with low offers that are rarely extended to customers who have been with them a year or more.

“This situation is fine as long as you know how and when to switch but most people don’t. Only 7% of businesses switched last year compared to around 18% of householders.”

Prices for businesses are not published in the same way as the domestic sector so anxious small business owners must, instead, wait for contract renewal letters from their suppliers to discover how much their proposed new tariffs will be.

Mr Elliott added: “The key thing is to look out for your renewal letter. This is an annual communication from your supplier that spells out when your renewal window opens and how much more they plan to charge you for the next 12 months if you do nothing before it closes. If the suggested renewal price is anywhere near 10 pence per kilowatt or above then you’d be wise to shop around. And, with prices rising as fast as they are, do so now because the price you’ll be quoted when you shop around may not be available at the end of your window.”

A typical renewal window for a business energy contract will be between 120-30 days before the contract end date, and it is only during this period that a business can apply to switch or look to negotiate a better deal.