How can you manage your business energy in an inflated market?

Following a delay due to the death of Queen Elizabeth II, the UK government has finally announced its plans to help businesses and households cope with the ongoing energy crisis.

But before we look into how you can manage your energy, let’s look at what’s been announced.

What has the government said?

On Wednesday 21st September 2022, Prime Minister Liz Truss unveiled a support package that will see energy bills cut to half their expected level this winter.

But what does this mean for your business?

Well, digging into what has been announced, here are the specifics:

• Businesses with an existing fixed price contract are eligible for support if the contract was agreed on or after 1st April 2022.
• If the contract was agreed on or after 1st April 2022, energy costs will reduce automatically by the relevant p/kWh for the scheme’s duration.
• Customers entering a new fixed price contract after 1st October 2022 will receive the same support.
• Businesses on deemed, variable, or default tariffs will receive a per-unit discount on energy costs, up to the maximum difference (expected to be around £115/MWh for gas and £405/MWh for electricity).
• Businesses with flexible purchase contracts will see reductions calculated by specific contract terms.
• There will be a cap of £75/MWh for gas and £211/MWh for electricity.

Our take on the announcement

The cap of £75/MWh (7.5 p/kWh) for gas and £211/MWh (21.1 p/kWh) for electricity represents the wholesale element of the total contract price. They don’t include non-energy costs.

The announcement makes no difference to how energy suppliers price, only the actual bills for the usage period between 1st October 2022 and 31st March 2023.

Suppliers will still price against the market rates where they are quoting, but specifics around the discounts have yet to be published. This announcement only applies to contracts signed on or after 1st April 2022 and to deemed, variable and flexible tariffs and contracts, although there is concern for contracts placed before this time.

Deemed or variable tariffs will still change over time and may still be subject to price increases.

How to manage your business energy in an inflated market

Although the announcement has its benefits, there are things you can do to help you manage your energy costs, including:

1. Look at new contracts

It’s an idea to look at new supplier contracts, where possible. Suppliers who have ceased quoting due to the energy crisis might start quoting again. However, this won’t happen immediately as they’ll need time to digest the announcement and wait for further government updates.

We don’t expect any quick fixes, but you might find that when these suppliers start quoting again, there is a deal that’s better than your current contract.

2.  Be more energy efficient

While renewable energy will make you more energy efficient, there are still places within your business where you will be wasting energy. So, make sure you roll out an energy efficiency plan that tells everybody in your business where they can reduce wastage, whether by introducing timed or motion sensor lighting or by reminding staff to switch off lights and equipment when not in use.

3.   Use Renewables

Implementing renewable energy will reduce costs short and long term. And it will also help you to reach your net zero targets faster.

4.   Asset Finance

Rising costs are a worry for every business, so one option is to explore Asset Finance.

Asset finance allows you to take out a loan or borrow money or take out a loan against company assets. This can help you to keep on top of rising bills (and it’s also a way to afford the implementation of renewables that’ll save you money).

How Inteb can help your business manage energy costs

Even with government help, you must ensure you’re on an energy contract that won’t cost you the earth. If you’re looking to switch or your contract is due to end, we can help.

At Inteb, our energy purchasing team can help you create a strong energy strategy and discuss your best energy contract options before you lock in and commit.

Ready to lock into a new energy contract?

Let’s get the conversation started – call us now on 0151 601 3476