New service highlights need for care with business energy bills


The Federation of Small Businesses (FSB) has launched a new service aimed at helping small business owners to identify suitable and cost-effective energy tariffs for their businesses.


FSB Energy is a similar service to the sort of comparison sites that many domestic energy users are now used to. Choosing the right business tariff can be a slightly more complicated process than switching domestic tariffs however and it’s one that many SMEs have struggled to get to grips with. 70% of smaller businesses report experiencing difficulty comparing energy tariffs and 43% have never switched supplier.


Furthermore, 45% of SMEs in the UK are currently on a ‘default tariff’. This is one that has not been negotiated and is typically far higher than a negotiated or named tariff.


The FSB claims that switching with its new service could save almost a quarter (23%) on some companies’ energy bills. This would represent £973 shaved off the typical SME’s annual £4,243 energy bill in the UK.


Energy bills are an unavoidable fact of life for almost every business in the UK and they’re only set to increase, with electricity prices for medium users predicted to rise by nearly 30% over the next five years. According to the FSB, almost a third of small businesses list energy costs as a barrier to their continued growth and success. For struggling businesses, energy prices can even be a contributory factor leading to company insolvency.


As well as switching to more cost-efficient tariffs, another important way for businesses to cut their energy bills is to reduce the amount of energy you actually use. The Government’s SME advice guide to energy efficiency estimates that the average SME could reduce its energy bill by 18 to 25% by installing energy efficiency measures, with an average payback of less than 1.5 years.


Many measures can be instituted with no upfront capital expenditure. The most common moves already undertaken included the installation of more energy efficient lights, the institution of switch off/turn down policies and improved insulation.


By Phil Smith


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