January 13, 2012 6:13 pm

Companies unlikely to gain from fuel cuts

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A string of price cuts from some of the UK’s major energy companies for domestic customers are unlikely to trigger any similar help for small businesses struggling with high bills. However, there are still a number of ways in which businesses can reduce their energy costs.

EDF Energy led the way in domestic fuel bill reductions this week, with an announcement on Wednesday that it would cut the gas tariff for householders by an average of 5 per cent, citing low energy use during the mild winter.

It was followed by British Gas, which cut its domestic electricity prices by 5 per cent with immediate effect, and SSE, which said its consumer gas tariffs would fall by 4.5 per cent on March 26. Npower will cut its gas prices from February 1.

But while the wholesale energy market is the same for both domestic and business customers, these tariff cuts will have little bearing on the amount business owners can expect to pay for fuel in the future.

This is because energy price movements are very different for corporate customers compared with domestic users – with the rates suppliers offer to companies often changing several times in a single day, according to James Constant, managing director of comparison website uSwitch for Business.

“Though it is true we are seeing a downward trend in pricing in the business energy space, this shouldn’t necessarily be attributed to the similar trend currently in domestic energy prices,” Constant said.

However, even if businesses cannot expect to enjoy sudden reductions in the cost of their energy supply, they do have the opportunity to lock themselves into a lower cost energy contract for the future, according to Constant.

“There is always an opportunity to negotiate better deals than you have been offered, but if you follow the domestic market you are likely to get a less good offer,” he said.

“The most important thing a business customer can do is to know when their contract is up because you need to position yourself for the best deal you can get for that date.”

For businesses to get the most out of their energy providers, they should regularly keep an eye out for pricing trends, and be prepared so that they can lock in lower electricity and gas prices for the next contract they sign, Constant explained.

It is also not just about getting the best price, but taking advantage of additional products that can save a business money, such as automated billing and smart meters. “Having a smart meter can make a tremendous difference,” Constant said.

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