How to cut your business energy bills
When running a business, you will face a lot of expenses, from travel fees to office equipment. You also need to factor in your energy bills, as your company will have to cover the cost of lighting, heating and electricity so your business has all the power it needs to grow.
Love Energy Savings has crunched some numbers and worked out that, on average, businesses could save as much as £1,700 a year on their energy bill – around a third of the average annual cost of £5,272 – yet 60% of businesses still fail to switch suppliers.
As we all know, bills generally rise in the winter and this affects your business in a similar way to your home. So here are some ways you can reduce the cost of your business energy bills:
Choose a business energy tariff
If you work from home, you might be paying for your energy bills on a domestic tariff. However, there are many savings to be had by switching to a business service, namely you can access significantly lower rates.
In addition to this, unlike household tariffs that have rolling contracts, yours is fixed for between one and three years, with providers purchasing all the energy you will use for the length of your deal in advance.
By locking in the price, your tariff is not immediately affected by the changes in gas and electricity costs. Therefore, if the prices are low at the point you sign up, you can benefit from a long period of time with reduced fees.
You can also claim your energy bills as a company expense by having a business tariff, helping to reduce the amount of tax you pay.
The drawbacks of business energy tariffs
Before you apply for a business energy deal, you should be aware of the few potential drawbacks. Firstly, to qualify for this tariff you have to prove you own a business and that a significant proportion of the electricity you use is for business purposes. The percentage will differ between providers, so check this before signing up to a deal.
As contracts are fixed rather than rolling, you need to make sure you know when the deal expires so you can look for a potentially better tariff elsewhere. If you fail to do this, you could automatically be enrolled into another contract that may tie you down for another few years, possibly at a higher rate.
Businesses pay 20% VAT on their energy bills, in comparison with the 5% domestic users are charged. You also have to account for the Climate Change Levy of 0.509p per kWH of electricity and 0.177p for gas when weighing up the financial advantage of a business energy tariff.
Finally, business users are not guaranteed the same protection from their energy providers or financial help as domestic ones, which may be something to consider.
Small steps to reducing your energy bill
Other than signing up to a business tariff, there are some small steps you can take to reduce your energy costs.
- Turn the heating to 19 degrees C and put on a jumper. For office work the temperature must be at least 16 degrees C, and if the work is very physical it should be at least 13 degrees C. Close windows, draught-proof your windows and doors, and turn off radiators and close curtains in rooms you do not use.
- Switch the lights off when you leave a room. The same goes for computers, printers, and turn any electrical equipment off standby.
- And as you may be using the kettle a lot during your working day, only boil as much water as necessary.
These may seem like little changes, but together they can significantly reduce your energy bill, helping cut your business’ expenditures and boost its profits in the long-term.