25/01/2011

Research by the business savings experts, Make It Cheaper, shows that only 15% of small businesses know what rate they are paying for electricity and only 16% of businesses managed to switch supplier each year.

So for the benefit of the 4.5 million SMEs in the UK, here are the figures:

The lowest price for electricity - available to those that do shop around - is just under seven pence per unit, whilst staying with the same supplier year upon year usually means paying considerably more. Worse still are the prices reserved for passive organisations that avoid entering any form of contract with their supplier and just pay the bills month in, month out.

The frustrating part of knowing that you are paying over the odds is that you are often unable to do anything about it for months. Unlike residential customers, businesses are usually only permitted to switch in very narrow renewal windows dictated (but not very well communicated) by the suppliers.

Business energy contracts can be anywhere between one and five years in length and only allow you to switch suppliers during the renewal window. These windows are different for each supplier but open and close somewhere between 120 days and 28 days before the contract ends. So, by innocently waiting until the end of the contract - as the vast majority of businesses do - you miss your window and end up being rolled into a new contract for at least another year on uncompetitive rates.

In the words of the UK’s consumer champion - Consumer Focus: “Small businesses have been caught in the unfortunate pincer movement of not only rising prices but also deteriorating terms and conditions of supply.” Even Ofgem, the regulator for the energy industry, agrees: “Some businesses are getting a good deal and others are not. Being a passive customer means that, as the years go by, you are much less likely to get a better deal than an active customer.”

‘Active’ simply means regularly changing your supplier and help is hand from the likes of Make It Cheaper. It acts on behalf of its customers with total impartiality and without charge, to offer cost savings across a range of products including business electricity, business gas, insurance and telecoms.

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