Could you be saving on your energy bills for your salon business?

With the sheer number of energy related stories in the media towards the end of 2013 it shouldn’t come as a surprise that salons need to be proactive in lowering their energy consumption. Lighting, hairdryers and washing machines are not cheap to run. According to the Carbon Trust in Better business guide to energy saving, most could use a lot less energy and indeed, from the Trust’s experience, even low or no-cost changes could bring bills down by 10%. This is a claim that is backed up by Chris Caffery, an advisor at utilityoptions.co.uk, an independent energy consultancy, who says that 95% of firms that contact him can save either on their upcoming contract renewal or their current pricing. No “Get out of jail” card There are a number of easy steps that salons can take to keep their bills in check and these start with understanding that being “out of contract” is not a get out of jail card. Having no energy supply contract may give flexibility, but it also means that salons will be charged out of contract prices that can carry a 30-40% premium over standard tariffs. However, while many energy suppliers have stopped automatic rollover of customers onto new 12-month contracts, some still operate this policy. Their customers need to diarise the contract renewal date and give notice accordingly if they want to be able to move. Those wanting to exit their contracts should, says Chris, either use the services of a broker to aid this transition or make sure that they know the notice period for their contract. Different suppliers have different termination windows. For example, firms wanting to leave SSE need to serve a termination notice 30 days before the renewal date while British Gas demands notification 90 days beforehand.  Interestingly, Ofgem, brought in new rules at the end of August 2013 that treat small businesses that spend up to £10,000 on each fuel per year more fairly. And from 31 March 2014, these small businesses will be entitled to clearer information about the key facts of their energy contract, will benefit from no-automatic rollover and will be able to give notice at any time for the given due date.  Consultancies can help Unlike the domestic market, because of the way the business energy supply works, making a quick online comparison is not possible. While the domestic market is largely based on location, the business market has a number of elements that determine the tariff cost. The majority of the rate is based on the wholesale energy cost which, says Chris, is influenced by many factors and changes daily (or hourly). Then there is a charge by the generator to deliver the energy to the customer on behalf of the supplier. Another contributor to a bill is government taxes and levies and of course, there is the profit margin for the supplier. However, there are other factors that need to be considered when looking at prices including credit rating and the length of contract. Chris notes that “there can be as much as 25% difference in price just because of where you are in the country.” For example, electricity in the East Midlands for a single rate tariff costs around 10.05p/kWh while the same tariff in Northern Scotland is charged at 11.56p/kWh. Just as with using intermediaries to find the best deal for, say, insurance, so firms can use an energy consultancy to trawl the market for the best tariffs. Says Chris, “apart from the fact that a broker has access to some preferential rates from suppliers, it’s the fact that the contract is managed that could potentially save a customer a great deal of money.” Consultancies offer a range of services include full bill analysis, bill correction where required and reminders in multiple formats of when the contract renewal is becoming due. Alternative energies For many the concept of going green and self-generation is a utopian ideal. But are the likes of roof-mounted solar panels worth the investment? According to Chris, the deals that were available a couple of years ago were very good as the government needed to hit EU targets; self-generated power (from renewables) was being sold back to the network at 43p/kWh, a rate guaranteed for 25 years. The “feed-in tariff”, as it’s termed, made the payback time short with an average of three to five years. That rate is no longer available and is now around 25p/kWh, making payback more like 10 years. Getting redress Chris says there are three avenues of complaint open to salons who think they have been unfairly sold a contract or rolled over on to a new contract having abided by the terms of the old one. “All suppliers have an in house complaints process, and they are doing more now than ever to get complaints dealt with first time, although it is still a far cry from being perfect.” But having exhausted that route, Chris suggests trying Ofgem and the Energy Ombudsman to have a complaint taken further.  Sources of help and advice https://www.ofgem.gov.uk http://www.ombudsman-services.org/energy.html http://www.carbontrust.com