The current structure of the UK energy market is beneficial to companies because they have the opportunity to shop around for rates and switch suppliers. Switching suppliers is an excellent way to save money on utility bills which can help a company manage operational expenses. But unlike residential tariffs, the business energy market has different rules when it comes to switching.
Companies are typically tied to a contract for a specific period, usually one to three years. This means you cannot transfer to another supplier in the middle of the deal without possibly incurring penalties and fees. As such, smaller businesses usually receive a reminder from Ofgem containing details of the current contract as well as the pitfalls of switching before the deal is up. As a guide for small businesses who are in the process of changing suppliers for the first time, take note of the following steps and reminders.
Step 1: Terminating your current contract
You need to terminate your existing contract proactively, otherwise, the supplier will automatically renew it for another term. For some, the extension does not sound like a bad idea, but the problem is, your supplier will likely put you on a more expensive rate. As such, communicate with your supplier before your current term expires and request to have it terminated when the time is up.
Your current supplier will only give you a specific amount of time to cancel your agreement. As such it is vital to have a reminder set in case your business does not belong in Ofgem’s category of companies eligible to receive reminder letters.
Step 2: Shopping around for new rates
After terminating your contract, you can now proceed to the next step which is comparing prices and shopping around for a new provider. For a more comprehensive process of searching for a new rate, take note of the following suggestions:
- Use a utility comparison website like Utility Bidder to compare quotes from different suppliers. Comparison websites also offer a one-stop shop for switching to a new provider, which means you have the choice to use their services or not.
- If you have the time to do it, you can also personally call each of the big six for a quote. You should also consider other small suppliers because they may have better offers than the big players.
- The last option is to hire a broker to manage the entire process for you.
Choosing which route to take in finding the best rate is all about convenience and the time you are willing to spend if you want to take on the task yourself.
Step 3: Transferring to the new supplier
It may take longer for a business to switch from one provider to another compared to residential consumers. Since the new contract does not begin until your current agreement expires, you will need to wait until then for the new deal to kick in. Before your new agreement starts, ask your previous supplier for a final invoice, and make sure that all paperwork is signed by the proper signatory to prevent any issues later.