Energy is an essential expenditure for the vast majority of businesses, and as both wholesale and non-commodity costs continue to rise, many will have noticed their energy bills increasing in recent years. But just because costs are rising doesn’t mean businesses can’t take control of their energy bills – so if your organisation’s bills are spiralling, it’s time to take action.
There are a number of reasons why your business’s energy bills might be higher than they should be – here are three of the most common…
- You’re buying energy at the wrong time
When you buy your energy will determine what price you pay – and wholesale energy prices are now so volatile that delaying a purchase by just a few days can make a significant difference to the price you pay. At the time of writing, energy prices are very high. Gas prices in particular have soared by over 50% in 2021 as a long European winter has left reserves in European storage facilities at record low levels and the cost of importing shipments from the global markets is rising. This caused market prices for gas and electricity to increase to near 13-year highs in July, and prices are set to increase further this coming winter. If you’re on a flexible contract, you will therefore need to closely monitor the market and consult your risk management strategy to decide when to purchase your energy and how much volume to buy in a bullish market over the coming months.
And it’s not just those on a flexible contract that must carefully consider when it’s the best time to buy energy. Fixed contracts may seem less risky because they involve just one purchasing decision, but this means that your business will need to pay the price you secure at one point in time for the duration of your contract. It’s therefore vital to time this purchase right, because if you buy when the market is high then you could be stuck paying over the odds if prices subsequently fall.
Our experts recommend…looking for a new contract 12-18 months before your renewal date, as this will enable you to see how the market changes in that time and secure a contract when prices are low. Whether you choose a fixed or flexible approach, working with an energy consultant can help you to navigate the market and secure the best price for your business at the right time.
- You’re wasting energy
Another common reason why businesses’ bills are higher than they should be is because they’re paying for energy that they’re not actually using. Whether a faulty machine isn’t running as efficiently as it should be, or your staff aren’t turning off their computers before they leave the office, there are many areas where your business could be wasting energy. By identifying and tackling these areas within your organisation, you could not only save money on your energy bills, but also cut your carbon emissions too.
If you’re striving to boost your organisation’s energy efficiency and reduce waste, the best place to start is by reviewing your energy data. Look at how much energy you’re using, as well as where and when you’re using it – is there any unusual or excessive consumption on a particular site, or at a particular time? If your data shows that you’re using lots of electricity outside of your normal operating hours, for example, it could indicate that equipment is running unnecessarily. It’s therefore important to regularly review your energy data so that you can identify and address any energy efficiency issues to mitigate the impact of wasted energy on your bills.
If your business is required to comply with the Energy Savings Opportunity Scheme (ESOS), you should have a list of practical energy efficiency improvements that your business could make within your report – so make sure that you’re implementing these measures to keep your costs down.
Our experts recommend…installing energy management software that enables you to visualise your business’s energy use, as this will help you to gain a holistic view of your consumption and easily spot areas for efficiency improvements.
- You’re not checking your bills
Many businesses simply pay their energy bills every month without questioning the amount they are paying. If that sounds like your organisation, then you need to pause before you make your next payment. We’re not suggesting that you shouldn’t pay your energy bills, but taking the time to review your bill and the amount your supplier says that you owe them is something that your business should be doing month in, month out, without fail.
Because business energy bills are complex, even for the suppliers that put them together, and that means that many contain errors. In fact, it’s estimated that around 20% of all utility bills are incorrect. If your supplier is billing you incorrectly, and you’re not checking your bills, then you could be overcharged for months or years before you notice the error. Fortunately, you can claim back overpayments for up to six years after you have been billed for them – but that doesn’t mean that you can be complacent when it comes to validating your energy bills. Make sure that you’re checking your invoices every month to avoid paying more than you should be for your energy.
Our experts recommend…either seeking support from an energy consultant or installing invoice validation to ensure that your bills are correct. Energy bills are made up of a complex combination of charges, so if you don’t have billing expertise and/or the time to thoroughly review your bills, having external or tech support can make a real difference.
Is your business paying too much for its energy?
If you’re striving to bring your energy bills down by buying energy better, improving your energy efficiency or reviewing your bills more regularly, speak to our experts to find out how they can support you in your goals. We’ve helped thousands of businesses to ensure they’re getting a fair price for their energy and reduce their energy costs – so call us today on 01772 689 250 or email email@example.com.