Common Questions About Business Electricity and Gas
Business energy can be confusing. Here we answer a series of common questions which might help you understand the market in order to make the best decision for your company.
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A glossary of all the major buzz words in the energy lexicon, with a difference, a 20 word maximum explainer for that quick introduction to a better understanding
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Business Energy Contracts
You can agree a business energy contract pretty much at any point to start at any point.
For many energy suppliers this is anything between 3 and 5 years ahead of today.
Most businesses however only get into their contracting stride 4-6 months ahead of their current contract end date but that doesn’t mean you need to follow that trend.
Some businesses contract for their energy more than a year in advance and others leave it until the last minute. There are advantages and disadvantages to any approach but the key consideration should always be the position of the wholesale energy market, if it’s favourable, that is the time to act, not an arbitrary date in the diary.
The critical thing to remember though is that although you can contract today for a contract commencing in 12, 24, 36, 48 or even 60 months time, it will not take effect until your existing contract has ended. You cannot jump to a better business energy contract until your current deal ends but you can agree that better deal at any point that suits you!
The business energy market in all but a few cases works on a fixed term basis, that means that if you are being supplied with gas or electricity you are likely to be in a contract that lasts for a defined period and within which you will pay a defined price.
Whilst you cannot leave this contract early, neither can you necessarily have freedom of movement at contract end if you do not terminate your contract in line with your terms and conditions. This may seem unfair, and indeed the existence of rollover contracts has caused controversy, however it is a fact of life in business energy that terminating your contract is essential if you are to be able to take best advantage of the market.
All is not lost however, not only do our dedicated supplier pages detail all you need to do with regards your termination we also provide termination letters for each supplier, feel free to download these and ensure you have freedom of movement come contract end.
Business energy suppliers do not operate a policy of cooling off periods when agreeing contracts with their customers. This is because suppliers forecast and buy the energy they supply to businesses based on the business’ unique characteristics. As a result this energy is deemed only suitable for the specific customer that is being contracted with. Suppliers therefore claim that they incur significant cost at the point of contract agreement that needs to be recovered with certainty.
If they were to offer a cooling off period the argument goes that they would need to price the potential risk of non-recovery into the contract and as a result levy higher charges.
One supplier however does buck the trend and offers a 7 day cooling off period, they are Ovo Energy.
When choosing an energy supplier that doesn’t offer a cooling off period it is important to go in with your eyes wide open as to the terms and contract period you are agreeing to, as a result using the services of Business Juice is the equivalent of a cooling off period – helping you not make a bad energy contracting decision in the first place!
Unfortunately once you have agreed a contract with a supplier you cannot cancel it, even if it is yet to start. This is because suppliers forecast and buy the energy they supply to businesses based on those business’ characteristics and as a result incur significant cost at the very outset of the contract you agree.
There are however a number of scenarios within which your contract will end, this though is not the same as a ‘cancellation’.
Firstly if your business moves from its existing premise, the contract that was in place will no longer be in effect. You will however still owe all monies related to charges accrued under that contract whether you are still in that premise or not.
Secondly, heaven forbid your business should cease trading again the contract that was in place will no longer be in effect. Likewise you will also still owe all monies related to charges accrued under the contract.
Unlike in the domestic market a business cannot switch immediately unless you are not currently in a contract*
As a result the time it takes to switch will be entirely dependent on your current contract end date.
The physical process of ‘registration’ with your new supplier can only commence 28 days in advance of your current contract end date.
In the majority of instances your switch will then go live the day after your current contract ends.
*Your business will not be in a fixed term contract if:
- You have recently moved into a premises and have not agreed a contract with an energy supplier
- You have provided the correct termination notice to your supplier but have not left their supply following your contract end date
Yes, we offer fixed contracts where both the term and the price is fixed for a set period. These can be 1, 2, 3, 4 or 5 year terms enabling your business to lock in certainty for the entire contract length.
We also offer shorter term contracts of less than 12 months.
As well as fixed price offers we also offer various variable or flexible priced products for those customers who wish to take advantage of the market (and are willing to accept the risk of potentially disadvantageous price movements).
To find out more about Fixed Energy deals click here.
To find out more about Variable and Flexible Energy deals click here.
Sadly yes. There are a number of unscrupulous businesses in the energy market who use all sorts of tricks and deceits to lead businesses into poor contracting decisions. If in doubt use Business Juice. For a full rundown on the current scams operating in the business energy market visit our guide to energy scams.
How is the business market different from the domestic market?
To find out the key differences between the business energy and domestic energy market, and there are an awful lot, visit our domestic vs business energy guide.
Yes they do, however the variability caused by the location of the business is far less influential on the end price you will pay than other factors such as:
- Your metering system
- Your credit score
- Your energy usage pattern
- Your payment method
- The wholesale energy market and the point at which you agree a contract
That said, assuming all of the above criteria are the same, your price will still differ depending on the location of your business. This is because it costs money to transport the electricity or gas from the generator or production facility to your meter. These costs differ by region dependent on the distance the energy needs to travel and the efficiency of the local network. As a result, with all other things being equal, your region will impact the final price you pay.
To find out more about how energy prices vary by region click here.
What is the process?
We offer our services to businesses of all shapes and sizes, whether a Small Office Home Office, a corner shop or a FTSE listed business we are focussed on supporting your business energy needs.
We have three core services:
SME Lite – for smaller businesses
SME Professional – for small and medium sized businesses with multiple locations or for those wanting a more involved service beyond just procurement
I&C Professional – for our largest clients, whether a multi-national corporation or an energy intensive user.
Whatever your business profile, we have an energy solution for you.
Apart from by providing regular invoices for your usage at the premise you will not hear from your business energy supplier unless there is an issue with your contract that either you or they raise. Indeed some business energy suppliers provide online account management and so you will not even receive the traditional monthly paper bill in the business post!
That aside there is one key point when you WILL hear from your energy supplier, this is when they write to you anything between 60 and 120 days ahead of your contract end date with your renewal offer. This is the critical prompt for you, if you have not done so already, to secure your business a new energy deal. By working with Business Juice we can handle all this for you to take even this burden away from your busy business.
A letter of authority is a passport to us doing all the work for you! It simply allows us to represent you in our dealings with your existing energy supplier. Without this authority we are unable to act on your behalf to establish critical information like your current contract end date (to ensure we can facilitate a seamless transfer to your new contract) and to undertake all actions necessary to overturn an objection to your transfer to your chosen new contract.
It does not provide us with any undue rights with regards your data and where additional permissions are sought i.e. the right for us to undertake a ‘soft’ credit check on your business, we will ask for this authority directly, outside of the letter of authority.
For your convenience you can agree your letter of authority via a number of means including a verbal recording (dependent on supplier policy), echosign online electronic signature or simply a good old paper signature.
We operate a ‘soft’ credit check policy at Business Juice. Full details of why a credit check is needed in business energy can be found in our guide to credit scores.
All energy suppliers base their contract offers on the credit score of an individual or business.
So that we can match you up to the most appropriate supplier and get your business the optimum deal we undertake a ‘soft’ credit check which in effect will provide you and us with an indication of whether you’re likely to get accepted for a product.
It is termed a ‘soft’ credit check as though it is still technically visible on your credit report it does not affect your credit rating. Potential lenders when checking your credit report DO NOT see soft enquiries. As a result multiple ‘soft’ credit check applications can theoretically be added to your credit report without impacting your business’ credit score.
Other scenarios where this level of credit check is undertaken as a matter of course is when you’re having your ID checked, getting an insurance quotation or even checking your credit score for yourself.
The ‘soft’ credit check then is the best of both worlds: A route to getting a better deal, without leaving a mark on your credit report.
VAT is normally charged at 20% on business energy. However in certain circumstances a business energy customer can qualify for a reduce VAT rating and only need to pay the domestic rate of 5%.
The circumstances that give rise to this are:
- Energy for charity non-business qualifying use
- Energy where the amount supplied does not exceed the domestic qualifying use de minimis limits
- Energy with at least 60% being eligible for qualifying use
Visit our comprehensive guide to VAT declaration to understand whether, to whom and how you need to make your declaration.
A Smart Meter is an advanced meter, equipped with a communications module, that allows it to communicate with other smart devices as well as with the energy supplier.
Another version of a Smart Meter is known as an Advanced Meter, this has all the external communication functionality of a Smart Meter but does not ‘speak’ to other smart devices.
It is this latter type of meter, the Advanced Meter, that is referred to when smart meters for business are spoken of. Although these naming conventions can prove confusing it simply means:
- A meter with a communications module
- That records the meter consumption
- Stores the meter consumption
- Communicates the meter consumption to the industry
Businesses have been able to install ‘smart’ meters for many years now. Historically this has involved taking out a separate metering contract. In more recent years, energy suppliers have started to offer customers an all-inclusive smart package. In addition since 2009 the government has mandated the installation of advanced metering for large consuming gas and electricity customers.
As a business you can opt for an Advanced Meter with your energy contract and this is often a sensible thing to do not least for the accurate billing that should entail from its deployment, however from 2015 the government has extended its mandatory metering requirements to a full scale ‘Smart’ Meter Roll Out.
The Smart Meter Roll Out is scheduled to run from 2015 through to 2020 and over that period it is planned that 53 million meters will be installed across the businesses and households of the UK. The order and timing of the installation plan is however largely unknown and as a result, even if things go according to plan your business could be waiting up to 6 years for your Advanced Meter to be installed.
Businesses do have a choice however, you can either await your turn in the roll out process or you can enter an all-inclusive smart package with the supplier of your choice to take advantage of the benefits of smart metering straight away.
Whichever you choose, smart meters can be an invaluable boon to the cash flow of businesses and should herald the end of estimated bills and inaccurate invoices.
To find out more about the smart meter roll out click here.
To find out more about energy suppliers’ smart meter options click here.
* Smart and advanced meters are not to be confused with ‘display’ units that simply inform a user how much energy a certain activity may be using. These gimmick products have been unhelpful in both confusing the consumer and slowing down the deployment of genuine smart solutions. If it isn’t ‘in’ the meter, it isn’t smart or advanced!
Power Cuts & Gas Leaks
Power cuts are likely to become increasingly commonplace in the UK as the ‘capacity margin’ of the electricity system is under pressure from high demand and low supply. Winter weekdays are likely to be the worst affected however National Grid has put in place measures to have managed ‘brown outs’ whereby the system is turned down, delivering lower voltage, in order to ration power and prevent a full scale black out. It is important therefore to ensure that any appliances that would be damaged by fluctuating voltage levels are not left connected unnecessarily.
If a power cut does occur you should contact your regional distribution company to understand the reasons and prognosis for the interruption.
To find out which regional distribution company services your area and how to contact them visit our Power Cuts & Gas Leaks directory.
Ask the Team
Ask our team anything about the energy industry and we’ll try and answer. Here we feature some of our responses.
How do Business Juice get paid?
No, absolutely not! There is no “switch now” or some other ruse to entice people into selecting a particular supplier simply because it makes us money. We provide a full market comparison having established the needs and characteristics of your business. You are then free to choose who and how many prices and contract options you want to see. You are in control.
In simple terms we can deliver better deals for more customers because we match those customers to those energy suppliers who wish to supply them, in doing so the supplier only pays for the customers they want and does not need to invest in costly, and not guaranteed advertising and promotional campaigns.
As a result the suppliers are better able to budget their costs of sale and therefore can provide more competitive prices by utilising our services to find them customers.
We can therefore get you the deal your business deserves and the supplier can get the business customers it wants.
Our infographic below explains the process that enables us to deliver contract savings to you, our customer.
For introducing a customer to a supplier we may be paid a commission by the receiving supplier. This potential payment is the suppliers’ cost of acquisition. This is not an additional cost charged for using our services. Suppliers utilise the services of Business Juice in order to keep their costs of acquisition low and to avoid the need to engage in costly sponsorship and advertising campaigns. By being paid in this way Business Juice keeps its service free at the point of use which we believe is important and at no point do we require payment directly from the customer for the services delivered.
Any payment from the supplier is only applicable where the following conditions are met:
- The successful transfer of your supply;
- Your completion of the full contract term;
- Your using the amount of energy originally forecast;
- Your settlement of all invoices throughout the term of the contract in a timely manner and via the contracted payment method
To help you understand any monies, which may be paid by the supplier, we provide all our customers with our Key Facts document detailing the terms of the contract agreed.
Put simply we couldn’t blame you for not trusting someone operating in the UK energy market.
Whether it’s claims of suppliers’ profiteering, price comparison websites hiding best deals or brokers mis-selling, there is plenty to be cynical about.
That’s why we set up Business Juice, the honest broker. Our CEO and industry veteran James Constant has seen it all, the good, the bad and the very very ugly. His vision has been to set up an energy broker with a difference: transparent, fair, honest, open and committed to doing the right thing.
James has also led the push for changes in the energy market from small things like campaigning for contract end dates on invoices to significant things like ending the practice of rollover contracts amongst the Big 6 suppliers.
In that spirit we really are here to help and yes you can trust us to do the right thing every time.
We work with the entire supply market and strongly believe that the Business Juice difference is the way forward for a new way of managing business energy.
We make available a Key Facts Statement for all of our customers.
This details everything you need to know about what we have agreed including any commission that we may earn from the energy suppliers.
We are unique in doing this, but hope that other brokers, suppliers and price comparison websites alike will follow our lead and bit by bit start to rebuild trust in the energy market.
About Business Juice
No, we have no connection whatsoever with the price comparison service Make It Cheaper. We are entirely independent and operate solely under the Business Juice brand and do not do this for any one else or indeed have anybody do this for us.
No, however until 2014 we were owned by the same parent company as uSwitch. Following a management buy out in 2014 this however is no longer the case and we have no connection with uSwitch.
Yes and No! An independent review by the Advertising Standards Authority (ASA) in September 2014 ruled that Business Juice was exclusively trading under the brand uSwitch for Business between January 2011 and April 2014. As a result any customer who used the services of uSwitch for Business over this period was being served by us.
In April 2014 we rebranded from uSwitch for Business to Business Juice following our management buy out.
Subsequent to our rebrand another website was promoted under the name of uSwitch for Business.
The ASA have made clear that this website is an entirely new entity and that customers of uSwitch for Business between January 2011 and April 2014 would not have had dealings with this company.
This ‘new’ uSwitch for Business is a collaboration between Make It Cheaper and uSwitch. For the avoidance of doubt we have no connection with this website whatsoever.
Keeping you up-to-date with the best energy literature in the market outside of Business Juice .
(To visit Ofgem’s website click here)
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