Energy bills are now an existential threat to businesses. Prices paid for energy have increased by an average of 250 per cent and have even quadrupled in some cases, according to the energy, utilities and environmental management consultancy, Cornwall Insight. It is critical that businesses pay close attention to ensure they are not overpaying for this essential resource. Here are our tips for businesses to help make sure their energy bills are as healthy as they can be.

No price cap for business

Homeowners are advised not to fix their energy prices and to remain on the price cap. This is not the case for commercial premises. There is no price cap for businesses and without a contract, they can expect to pay anywhere up to three times as much per unit of energy. It is therefore vital to remain in contract.

There is no need to wait until an existing end date to negotiate; contracts can be secured more than a year in advance with some suppliers, particularly for larger portfolios. Larger portfolios may also find themselves with multiple contracts, all with differing end dates. Look to consolidate end dates when negotiating to save time and effort in the future. 

Be aware of volume tolerance clauses too; these require a business to use a minimum volume of energy. While traditionally not enforced, current market conditions may see suppliers enact these clauses if the minimum volume of energy is not used. 

Where is all the energy?

Simply knowing how much energy premises consume is not enough. Knowing exactly when and where that energy is consumed will be far more beneficial. Automated Meter Reading (AMR) installed across a site will provide this information and identify where savings could be made. They can also be used as a guide to help with preventative maintenance of aging assets on site. Replacing one faulty switch saved a client £25,000 a year because that single switch was controlling a significant amount of air conditioning and lighting, but the fault was only noticed when centralised data collection was implemented.

Claim a refund

The Climate Change Levy (CCL) is an environmental tax charged on the energy that most businesses use but crucially not those businesses involving domestic energy use or those with a charitable end use. If an enterprise is deemed more than 60 per cent domestic or charitable use, it will be exempt from CCL. Even if a business is between 1 and 59 per cent domestic or charitable use, it is still entitled to an exemption based on that percentage.

If a business has been paying CCL when it possesses domestic or charitable assets, it could be entitled to a refund for payments as far back as six years.

One business, one MOP

Enterprises that have Half Hourly (HH) metered supplies should check how many Meter Operators (MOPs) they have. If a business has not stipulated which MOP is appointed, it is possible that suppliers have elected to appoint their own partner, potentially leaving a business with multiple data collectors and aggregators. By contracting a portfolio to a single MOP, all data can be in one place, making it easier to analyse and identify savings.

By nominating a single MOP, companies have been able to rank their entire portfolios and identify the most efficient buildings. This allows for a more focused approach to CAPEX projects such as lighting replacements, providing all the data needed to calculate the saving and payback of the investment. 

Keep the lights on

An Authorised Supply Capacity agreement (ASC) is the contracted power allowance (kVA) from the Distribution Network Operator (DNO) for HH settled meters. If a business does not have an ASC agreement in place, energy supply security could be compromised if others with ASC agreements increase their demand.

If a need to increase the energy demand covered by an ASC is forecast (perhaps for EVs or electrified heat), it is best to negotiate this far in advance of the actual rise. UK energy demand has grown significantly over the past two years and a requirement for network reinforcements is causing vast delays.

Do not be tempted to relinquish kVA to save money – it can be extremely difficult to reverse your decision. Consider: is it worth saving a couple of hundred pounds a month only to then have to pay hundreds of thousands to get that power back if your demand goes up?

Further information

Contact Michael Lock or Ben Steele

Savills Energy & Sustainability