Choosing an energy supplier can be complicated and once your choice has been made, you need to stick with the supplier for the duration of your contract – which can easily be several years. We’ve put together some of the most important factors to consider. If you don’t want to be left to your own devices when choosing your right energy supplier, just get in touch! We consider all the below factors when making recommendations to you so you don’t have to waste time and risk making the wrong choice.
Price is king? Unlike a car or office chair, energy as such is a commodity and it won’t be “better” if you go for the more expensive option. Electricity prices include different cost components so make sure you know exactly what you are actually paying for: Wholesale costs, supplier operational costs and profits, costs of government obligations, network and balancing costs, and third party costs. Most businesses are better off choosing fixed rates; even if the market price for energy rises the amount you pay for your energy bills will stay the same. Often it’s worth going for a longer contract duration even if a 1-year contract looks appealing with lower rates. Since energy prices have gone up for years and the majority of industry experts is expecting this trend to continue, you might end up paying a bit more in year 1 than on a 1-year contract, but significantly less in the following years.
Making sure that the supplier accepts business with your credit score is crucial since suppliers can reject you if they think your credit rating makes you a risk to them. Business energy is costly and bought in advance so any failure on your behalf could be detrimental to the supplier’s business. Moreover, energy suppliers work off SIC (Standard Industrial Classification) codes to determine if your business sector is considered ‘high risk’. If your business credit score is weak this doesn’t mean it’s the end of the road for you. Some suppliers accept businesses with low credit scores and/or from “high risk” sectors. To mitigate the risk the supplier could then:
- Charge an additional price premium
- Insist you pay direct debit
- Install a pre-payment meter
Billing Solution & Payment Terms
When it comes to billing you want to make sure that you are receiving your business energy bills consistently and that they are accurate. You should consider a supplier who gives you the choice between monthly and quarterly billing, or if you already know that you prefer one over the other, that they offer the one you need. The same applies to payment methods: You want variety. Depending on your businesses credit score and the supplier’s preference for certain business sectors, you will either be able to choose from all options or be limited to a select few.
When selecting a supplier you should take into account their overall reputation. If you expect good customer service or after care, stay away from suppliers with a bad reputation. Reputation is not necessarily linked to size. Yes, larger suppliers are more likely to have the resources and well executed systems that allow them to offer a seamless service. Smaller suppliers on the other hand usually develop closer relationships with their customers and can be equally as reliable.
You want the reassurance that your energy provider will not go out of business. If your chosen energy supplier goes out of business, Ofgem will put its contracts out to tender. This allows rival suppliers to bid for the business. Once the new supplier is appointed you will be moved to a new contract. The problem is that the minute your energy supplier goes out of business, your old tariff ends and you are put on a “deemed” contract – an arranged, usually expensive tariff that you haven’t chosen. Even though Ofgem will negotiate with the suppliers for the best deemed rate, there is a good chance that your energy bills will increase.