Archive for January, 2014

It’s always easiest to put off unpleasant tasks, which for many includes checking energy contract renewal options and prices.

This creates a number of risks however, most importantly that you’ll have to pay whatever the market decides at that (limited) point in time, or even worse, be forced into penalising out-of-contract rates.

These five simple rules will help ensure you pick the right contract at the right time for your business…

1. When you contract your energy supply is the biggest factor in the price you pay: wholesale energy prices can fluctuate by as much as 50% in a 12-month period – so getting your contract timing wrong can have a nasty impact on your costs

2. The wholesale price of energy is at its lowest level since June 2012, so if your contracts expire in the next 12 months now is definitely a good time to check prices – don’t wait for the market to rise

3. Avoid punitive automatic renewal or out-of-contract rates: if you don’t terminate your existing contract there’s a risk you’ll be rolled-over on to a new 12-month contract at high rates, or even worse, put on out-of-contract rates which can be up to 50% above market prices

4. Make sure you have time to check the T&Cs: they vary between each supplier, e.g. some include charges such as the Feed-in-Tariff which others don’t – so you could be landed with additional costs if you don’t understand the terms of your contracts

5. Put yourself in control: checking prices, comparing offers and understanding contracts all takes time, which you might not have if you wait until the last minute. Starting the process early puts you in charge – you decide what the best contract and best price is for your business

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Water and sewage costs are determined by set tariff structures which most water suppliers publish on 1 April each year, with two implications:

  • you may experience increased tariffs and therefore costs for the coming year
  • 31 March is the last day on which you can claim rebates/refunds for incorrect charges for the previous year

As water and sewage charges become ever more complex the risk of tariff and billing mistakes looms ever larger. A priority in managing water costs is therefore to understand the volumes of water and sewage currently being purchased, checking these against the applicable tariffs from your water company.

This process ensures that the correct charges are being applied based on your actual usage, identifying both opportunities for cost savings in the future and refunds for any historic over-charging.

The key thing though, is to audit these tariffs before 31 March so any errors can be claimed for the previous year; if you wait any longer refunds will only go back to 1 April.

A water audit is a quick process requiring only copies of your latest water bills and can usually be done on a no refund-no fee basis.

The energy price blame game has been in full swing for the last few months, with politicians blaming suppliers for not passing on wholesale price reductions and suppliers blaming politicians for rising green taxes.

Amid the bluster it’s been difficult to identify the true story: Ofgem has stated that wholesale gas prices increased by only 1.4% in the last 12 months, but with suppliers hedging risk and buying in advance, they could have seen a 4.6% increase if they bought gas for the 2012/13 year on 30 September 2012 and gas for the 2013/14 year on 30 September 2013.

As with all energy prices, it comes down to timing

The good news is that long-term gas prices are now lower than current prices: gas for the 2019/20 year can be bought at around 8% less than for this winter according to the Major Energy Users Council.

Although many businesses can’t look that far ahead, 2 and 3 year gas contracts are now cheaper in many cases than 1 year contracts, so it’s definitely worth checking renewal prices now, even if your contracts don’t expire until later in the year.