Riding out the energy storm

This summer promises some respite to residential customers from eye watering energy bills, but small businesses fear no let up from rising costs.

Nine out of ten small businesses have seen energy prices rise this year, with the average increase being just over 25%, according to a recent survey from Paragon Bank. Plus, many are now locked into high-cost contracts, because their owners were forced to negotiate fixed-rate deals while prices were high.

Now that prices have fallen, the Federation of Small Businesses (FSB) is lobbying the government to force energy suppliers to release small companies from punitive contracts. But that is cold comfort for those who are currently paying above market rate for power.

The good news is that there are some things you can do to take down the costs, and to get help if you cannot pay.

Check your eligibility for government schemes

Energy prices for businesses have risen because the Energy Bill Relief Scheme, which offered discounts to business customers, has been replaced with the far less generous Energy Bills Discount Scheme.

This scheme will now run until March 2024 and will offer some support to businesses paying high unit prices for energy. Even the government admits that this support will be “significantly reduced” compared with the earlier scheme.

But while this scheme is applied automatically, there is further support available for those companies that are classed as operating in sectors that use a lot of energy. You will need to apply for this support and have 90 days from 26 of April to do so, so time is running out.

Many manufacturing businesses are eligible, but also libraries, historic houses, and visitor attractions. Check and apply on the government website.

Switch if you can

If you have taken out a fixed-rate business energy contract you will have to wait until near expiry to start looking at alternatives. If you are at the end of a contract or on a variable rate, though, you could save by shopping around.

Many people use an energy broker or switching service to do this. These energy experts can save you a significant sum but will charge commission for their services. This is added to the unit price for every kilowatt of energy that you use. There is also typically no cooling-off period for business contracts, so check that you are happy with the deal you are offered, and understand the commission charged before switching.

If you are not sure about the length of your notice period or terms of your deal, it is always worth asking your current supplier whether you can switch. The supplier must explain why not if you cannot and your options. The Citizens Advice website has more information if you are confused about your rights.

Find grants for energy efficient improvements

Some simple improvements can help to save you money, and you may be eligible for help with this. Check if your energy provider or local council has any grant support.

Even if none is available, being more energy efficient could save your business cash. Mark Sait, who runs the energy efficiency website Save Money Cut Carbon, says that solutions such as low water use toilets, LED lights and LED lightbulbs can all save businesses money. Changes in behaviour, such as keeping documents digital rather than printing, and switching off unused appliances can help too.

Know your rights

Struggling to pay or facing an energy bill that stretches back years? Ensure you know your rights when dealing with your supplier. If you are what is termed a ‘microbusiness’, you have more rights than larger companies and cannot be billed late for energy used more than 12 months ago. Plus, it’s also easier to switch suppliers if you are a microbusiness.

A microbusiness either has fewer than ten employees and turns over less than £1.8 million, or has more than ten employees but uses less than 100,000 kWh of electricity and less than 293,000 kWh of gas a year.

Your supplier may be able to offer you a payment plan if you cannot pay energy bills. For further independent help contact the Business Debtline on 0800 197 6026 Monday to Friday 9am-5pm. They are a registered charity and give impartial advice.

Looking to switch energy suppliers? Read our guide on how to switch your small business energy provider.

Rosie Murray-West

Rosie Murray-West is a freelance journalist covering all aspects of personal finance, as well as business, property and economics. A former correspondent, columnist and deputy editor at The Telegraph, she now writes regularly for publications including the Times, Sunday Times, Observer, Metro, Mail on Sunday, and Moneywise magazine.