Why do SMEs Need to Switch Energy Supplier?

It is now common knowledge that npower has continued to face regulatory action from Ofgem over its treatment of customers. Following the widely publicised £26 million penalty issued in 2015 for inaccurate billing and poor complaint‑handling procedures – criticised by Ofgem Chief Executive Dermot Nolan as “chaotic” – the energy supplier was penalised again in 2018.

In September 2018, Ofgem’s Enforcement Decision Panel imposed a further £2.4 million fine on npower for breaching Standard Licence Conditions relating to the accuracy and presentation of its electricity supply information. The decision followed an investigation into npower’s compliance and confirmed that the supplier had failed to meet its regulatory obligations under SLC 12.18 and 12.21.

At a time when the call for entrenched guidelines and rules is louder than ever before, what can small businesses do to ensure they don’t get caught up in the turmoil?

SMEs are losing millions of pounds

Despite economic fortunes improving, many businesses are still counting the pennies, as well as the pounds, and SMEs are usually given the rough end of the deal. Far too often, energy suppliers play on apathy in order to charge higher tariffs, repaying loyalty with costly renewals. Unlike the domestic sector, which sees customers switch energy providers regularly in pursuit of the best deal, 40% of SMEs haven’t switched in the last 5 years.

Obviously a huge amount of awareness raising is needed here.

On average, Love Energy Savings has found that they can reduce a business’ energy bills by £1,772, which has resulted in their 48,000 customers saving over £66 million. What is worrying is that this only represents a fraction of SMEs, exposing just how much many small businesses are overpaying by.

Energy suppliers should be trustworthy

Transparency and communication are key for any business / customer relationship to work and trust is vital. Npower has now jeopardised those relationships, being criticised for failing to treat their customers fairly. It’s down to SMEs to seek out good council to ensure they don’t suffer too.

In a recent interview that Love Energy Savings conducted with Robert Buckley, Director of Cornwall Energy, Robert voiced his opinion on how Third Party Intermediaries (TPIs) such as Love Energy Savings has a duty to help small businesses get the fairest deal on their gas and electricity bills.

I think if you look at the SME market, it is a very, very large space and the TPIs are just beginning to scratch the surface of it. Robert Buckley, Cornwall Energy

Make switching a priority

Saving money on energy bills shouldn’t just be an add-on or afterthought when it comes to a business’ financial planning, it should be a priority. Like any overhead, it needs to be monitored closely, negotiated regularly and accounted for.

It’s not only switching your energy provider that can reduce your bills. Being aware of lights left on, windows left open and what type of light bulbs you’re using can also influence the size of your bill. As can investing in insulation or installing a smart meter; all of this can help bring costs down.

Ultimately though, those businesses that will save the most will be the ones who are highly proactive, taking those 60 seconds needed to compare their energy prices, taking time to speak with experts and utilising their knowledge to get the best deal.