Tuesday, 3 March 2020
How to cope with rising energy prices as your company grows
By Chamber member SK Energy
Some business costs are often overlooked because they’re seen as relatively fixed, or are just part and parcel of running a business, with gas, electricity and water often falling into this category.
But, whether your company is growing fast, on a steady trajectory, or a startup, those energy costs can be reduced if you know how.
What drives rising energy prices?
Your bill is made up of several components, including the market wholesale price, supplier mark-up, transmissions costs, environmental surcharges and government taxes.
Nearly 50% of a price is governed by the wholesale price. While the UK generates the majority of its energy itself, approximately 40% of gas and electricity is imported from overseas. This leads to a certain amount of volatility.
Overall demand is down over the past decade, but the wholesale price is increasing. The suppliers are now offering longer-term fixed rate contracts to help manage budgeting – but also tie you into agreements running for up to five years.
Like any cost of life – be it car insurance, buildings insurance or energy – there is no loyalty within the energy industry. In fact, being loyal will cost you, as prices increase each year for existing customers
And of those who do check, a large percentage forget or decide not to make the change.
If you haven’t switched in the past 12 months, you could make savings of up to 50%. That number is so high because your previous bill will have had a price increase.
The reality of switching supplier
As more business owners move to lower costs, what’s stopping everyone else from moving? It seems that even five minutes is too long in a busy day to start the process. But, if you don’t want to do it yourself, there are plenty of accredited energy brokers that undertake all the heavy lifting on your behalf.
Managing consumption as demand increases
As your business grows, your gas and electricity usage is likely to increase with it. Perhaps you’re preparing more meals in a restaurant, adding new fridges in your convenience store, purchasing additional computers for your staff or expanding into new offices.
Whatever the circumstances, the case for being aware of energy management and taking action has never been stronger.
If, as we’ve seen, the wholesale price is moving upwards, that puts pressure on other areas of our business interests. Managing the unit price is one part of the cost reduction equation when it comes to energy.
The other element is keeping consumption as low as possible. Easy savings are made from installing LED lightbulbs instead of traditional lighting. These bulbs have come down in price as demand increases.
Keeping thermostats at reasonable levels, turning computers and lights off when not in use, and keeping doors and windows closed are all ways that could lead to an immediate 20% drop in energy consumption.
The majority of businesses in the UK are investing in environmental changes, but the largest impact comes from staff awareness and a change in attitude.Back