Energy service launched to help small businesses cut costs

Published:  09 December, 2015

The Federation of Small Businesses (FSB) is launching a new service to help its members reduce their gas and electricity bills.

FSB’s new energy service (www.fsbenergy.org.uk) is part of a concerted drive by FSB to help smaller businesses reduce their energy costs.

The new service enables members to obtain advice on competitive rates for their utilities, identify the annual saving achievable by switching tariffs and even have new contracts arranged for them if requested.

It is born out of research suggesting that smaller businesses are being failed by the energy market, with 70% of these businesses experiencing difficulty comparing energy tariffs and 43% saying they have never switched supplier.

The new service will be run on behalf of FSB by business cost saving champion Make it Cheaper. It could generate annual average savings of 23% for new customers switching their gas and electricity provider, equivalent to £973 off the £4,243 average annual energy bill of an FSB member.

FSB Energy will also take care of the paperwork involved in switching - such as terminating existing contracts on behalf of members - saving them time and hassle in the process. The service also reminds members when their fixed price periods end to make sure they never ‘default’ on to more expensive rates.

The CMA, which is preparing to conclude its investigation into the energy market, says SMEs in the UK pay around £500 million more a year than if competition was functioning effectively. It has voiced concern that 45% of SMEs have been placed on a default tariff – one that has not been actively negotiated – which can be more than twice as expensive as a negotiated tariff.

Dave Stallon, operations director at FSB, said: “Energy is an increasingly important issue for smaller businesses. There are many ways they can make substantial savings through the implementation of energy efficiency measures as well as ensuring they get the best tariff they can on their gas and electricity. Many smaller businesses, however, either don’t believe they can make substantial savings or haven’t trusted the market and the system enough to engage in the process. 

“Our new service is designed to give smaller business owners easy to use advice they can trust, to enable them to make savings with the minimum of fuss. We are also very actively engaged with the CMA to improve the energy market for smaller businesses and are offering resources and advice on energy efficiency. In combination, we are confident that our initiatives can help to make a significant difference to smaller businesses’ energy bills.” 

Energy efficiency

In parallel with the establishment of FSB’s new energy service, the organisation is promoting the benefits of smaller businesses introducing energy efficiency measures. The Department of Energy & Climate Change (DECC) estimates that the average SME could reduce its energy bill by 18-25% by installing energy efficiency measures with an average payback of less than 1.5 years.

However, while FSB research demonstrates that 90% of businesses want to be energy efficient and 58% of businesses surveyed have already made changes to improve their energy efficiency, there are major obstacles that need to be overcome.

Almost half (45%) of businesses identified operating from leased or rented premises as one of the biggest obstacles preventing companies becoming energy efficient. Other barriers identified include a lack of concern around energy costs (45%) and a lack of capital for energy efficiency investment (29%).

The most widely reported energy efficiency measures already taken were: the installation of more efficient lights, lamps and bulbs (40%); the introduction of switch off/turn down policies (23%); and improved insulation (23%).