With over 50 business energy suppliers now operating in the UK, there’s never been a better time to switch suppliers. Switching your electricity or gas company remains the best way to get the lowest prices and best deals for your business.
However, with so much choice, it may seem overwhelming to try and choose a new supplier. That’s why we created the following guide on how to switch suppliers and what to watch out for when you do.
When Is The Best Time To Switch?
Switching your business energy supplier is slightly more complicated compared to switching your home energy supplier. Your business size, energy usage and contract type and length all play a role in when you’ll be able to switch.
Renewal Dates & Switching Windows
The first thing you need to know is know when your current contract is up for renewal and when you’re allowed to change suppliers, often called the switching window or notice period.
Have a look is on your current energy bill or energy contract. It should clearly show you when your contract is up for renewal and when your switching window is open and when it closes. If you’re on a fixed contract your renewal date, may be several years in the future.
Typically, it will be anywhere between 60 to 120 days before the end of your current contract, although some suppliers have periods as short as 30 days or require notice as far out as 180 days.
If you can’t find the information, you should be able to ask your energy supplier for it. Moreover, your energy company must also send you a renewal letter (but only if you’re a micro-business, more below) to inform you of your renewal dates, right to switch suppliers, when you can do so and how much you’ll pay on your new contract if you opt not to switch well before your current contract expires.
Medium and Large energy customers who want to switch, need to pay particular attention to the switching window as they likely won’t get a letter but it is often the only time you’ll be allowed to change suppliers. Failure to do so may mean you’re rolled onto another 12 month contract and could end up paying as much as 100% more than you need to.
Rules For Micro-Businesses
The one exception to the above are micro-businesses. These are defined by Ofgem as meeting at least one of the following criteria:
- Employs fewer than 10 employees (or their full time equivalent) and has an annual turnover or balance sheet no greater than €2 million; or
- Uses no more than 100,000 kWh of electricity per year; or
- Uses no more than 293,000 kWh of gas per year.
If your energy bills are less than £1,000 per month your business almost certainly qualifies.
Ofgem now requires that the maximum notice period for terminating a supplier can impose on a micro-business is 30 days. Additionally, 60 days before a fixed-term contract ends, suppliers must also inform you how much energy you use each year, and give you details on how the price of your current deal compares with the new contract prices.
Therefore, if you run a micro-business you have a bit more time and flexibility about changing your contract and supplier.
Switching Deemed Contracts
If you enter into a new business premises you will likely be placed on a deemed contract with the current supplier. If this is the case, you can switch at any time, without any notice period restrictions and/or termination fees.
The same rules generally apply your contract has expired and if you’re paying out-of-contract tariff rates with your supplier.
Also, Ofgem now requires that: “if you are consuming energy on a default – or deemed – tariff, your supplier has an obligation to take all reasonable steps to tell you about other available contracts and how you can get information on these.”
Once you’ve determined when you’re eligible to make your switch, the next step is to figure out if there are better rates out there for you. This is where sites like ours come in handy.
The two things you’ll want to look at are:
- Unit Prices: This is the price you pay per kWh of electricity or gas, usually priced in pence. Typically rates range between 10-20p/kWH for electricity and 3-6p/kWh for gas. If you’re quotes more than the above you are definitely paying too much.
- Standing Charges: This is daily charge paid regardless of how much energy you use or if your business is even open. These can range very widely, anywhere from 25p/day for small customers to £10/day for large commercial operations. Also be aware that you will pay a separate standing charge for both electricity and gas.
Energy Quotes: Online vs Brokers
When you want to compare prices for a new electricity or gas contract you have two options. Either you can compare prices yourself online or you can go through a business energy broker. Neither is “better” than the other, they’re just different. And there’s nothing stopping you from using both.
Here are the pros and cons of each method
You can get these either through comparison sites like ours or by going direct to the energy supplier and requesting a quote from them.
Just be aware that at some point you will almost certainly still need to talk to someone about your business and energy needs to make sure you’re placed on the right contract. Also, they won’t be able to give you prices instantly online, because of the constantly changing nature of wholesale energy market prices.
- Suppliers usually offers their best rates
- Can get quotes quickly
- Might show deals that aren’t right for your business
- Takes effort if you decide to get quotes directly from multiple suppliers
- Comparison sites may only compare a limited number of suppliers
You can get business electricity and gas quotes online here.
Business Energy Brokers
Business energy brokers and consultants will do all (or at least most of) the leg work for you and may be able to find deals from smaller suppliers you may not be aware of.
They may also even be able to help you reduce your energy usage saving you even more money. However, this all comes at a cost.
- Some brokers can handle the entire switching process
- May highlight deals you might not come across online
- No charge for most basic consultations and can help advise you about your energy needs
- Won’t be able to give you prices online, will almost always require one or more calls.
- May offer recommendations based on what earns them more money not what’s best for you.
- Energy brokers usually make their money by adding a margin into their contracts. For example, they may quote you a price of 12p/kWh for electricity, although the supplier’s best rate is really 11p/kWh. The broker then gets to keep the extra 1p/kWh as their margin. This is how they make their money, and as you can see it can quickly add-up if you use a decent amount of energy.
You can find a list and compare business energy brokers and consultants here.
How To Get The Best & Most Accurate Quotes
To get the best and most accurate quotes you’ll need to provide the following:
- Your MPAN (Meter Point Administration Number) for electricity meters and/or MPRN (Meter Point Reference Number) for gas meters.
- Your renewal letter (if you get one) stating how much energy you use and/or a good estimate of how much energy you use if you don’t have one.
- Previous electricity and gas bills.
- Information about your business and the location(s) being supplied
How To Get Even Lower Rates
Comparing prices, either via a broker and/or online comparison site offers by far the biggest savings. However, you can save even more if you do the following:
- Negotiate with your current supplier: Once you have some quotes in hand you may be able to negotiate with your current supplier for an even better rate. Alternatively, you may be able to use the quote from one supplier to negotiate with another.
- Pay by direct debit: Most suppliers want to make sure they get paid on time each month. Therefore they are often willing to give a discount (sometimes up to 10%) to business customers who pay via direct debit, which is viewed as being the least risky way to pay.
- Get electricity and gas from the same supplier: Unlike home customers, business energy suppliers don’t offer dual fuel discounts. However, you may be able to negotiate lower deals for both electricity and gas if you say you’ll go with just one supplier.
Terminating Your Existing Contract & Signing-Up With Your New Supplier
Once you’ve found a new tariff you’re happy with, the next step is to inform your current supplier that you will be switching and then sign-up with the new supplier.
However, before you do this you should be aware of the following things:
- No cooling-off period: Unlike domestic energy, there is usually no cooling-off period with business energy contracts. This means once you sign a new contract you can’t then go and change your mind. So if you think you might want to try and negotiate with your current supplier before switching, you need to do so before signing any other contracts.
- Exit fees: Generally speaking you should not face any exit or cancellation fees so long as you’re changing within your notice period.
- Transfer time: Normally it takes 4-6 weeks to switch suppliers but can take up to 8 weeks if you’ve got more complicated needs. If your contract with your current supplier ends before the transfer can take place, you may end up on deemed rates, although this should not be for long.
To terminate your existing contract you’ll usually have to send your current supplier a termination letter via recorded delivery (may also wish via e-mail as well).
It generally needs to include the following:
- Printed using your company letterhead and include your business name and registered business address (should match contract).
- Notice that you wish to terminate your contract.
- Your contract number and date it is due to end.
- Your MPAN / MPRN numbers related to the contract.
- The address of the location(s) being supplied by power.
- Signed by business owner or authorised representative.
Can your supplier refuse to terminate your existing contract?
Your supplier can object to you switching, but only for specified reasons. Ofgem states that the two most common reason are:
- If you are in debt with your supplier.
- If you are still bound by your contract, because you are on a fixed term contract where the term has not run out.
But they can’t object if your contract has ended (or is going to end and you’ve given notice during the switching window) or your currently on a deemed contract.
Anything else I need to do before switching?
If you follow the steps above, your switch should hopefully go smoothly. However, just be aware that you will still have to make sure you send final meter readings to your supplier if you’re not using some Smart, HH or AMR meter and arrange final payment of all debts. You don’t want to delay doing this as it could cost you money and time.
But once that’s taken care of you should be free to enjoy cheaper electricity and gas.