Commercial Energy - what next for businesses, large and small?

Sea_Shell

Obviously the focus has been on domestic energy, however, we’re now starting to read anecdotally about small businesses (pubs, cafes)  being faced with massive (up to x6) increases to their energy bills, but how does the commercial energy market work, and what economies of scale are there?

Is it similar to domestic that very few (if any) suppliers are offering to take on new customers, so businesses are left to either revert to an “uncapped” SVT or take another contract (fix).

Are contracts typically longer, 2-5 years? 

Do larger businesses, or national chains, have the ability to negotiate their energy contracts?   So if the underlying price increase would otherwise be x6, can they negotiate, say only x3 or x4??

How does it work for franchises?    Do they each have to pay (choose) their own individual suppliers and are treated as a small business in and of themselves, or can they get access to a “cheap” tariff, negotiated for the whole chain, nationally?    McDonalds, Costa etc. (which google tells me are on a franchise model)

 

It’s not looking good for businesses that need premises to operate, especially if they are heavy users.

 

Pubs are currently making the headlines, but what of engineering, hotels and holiday accommodation, dry cleaners.....well, basically everything, that cant be done "on-line" or from home.

The picture doesn't look pretty, but as a country can we afford to help?   Or is this another case of can't afford NOT to help?

Thoughts welcome, especially from owners of businesses that have maybe just run out of contract.

 

Robin9

My contract for my Church Hall runs out end September.  Home to Food Bank, AA, MIND, Choirs , Well Being -  many of these are responding to the issues after COVID .  Utilities were 20% of my running costs -  they will be 80%.  Do I ramp up my hire charges perhaps forcing some of these groups to close.

Sea_Shell

Robin9 said:

My contract for my Church Hall runs out end September.  Home to Food Bank, AA, MIND, Choirs , Well Being -  many of these are responding to the issues after COVID .  Utilities were 20% of my running costs -  they will be 80%.  Do I ramp up my hire charges perhaps forcing some of these groups to close.

What % increase in energy costs is that?    Is that for SVT or for a new contract?   

Will it be viable to keep the Church Hall running if you don't put up your hire charges? 

Robin9

We haven't had the new rates yet but 100% perhaps.

Some very difficult choices to be made - but it will mean declining the one off requests for hire when the hall hasn't been used earlier in the day;   

The electricity side is benefiting from a full LED replacement last year and the gas will have wifi control of the gas boilers. 

Mister_G

As a Trustee, I manage our small business Village Hall electricity supply (no gas).  We are currently on a 4 year fix at 14p/unit + 26p/day SC, which expires in December.  We use about 4000kWh pa.

I have recently negotiated a 3 year fix starting in December, but at 42p/unit + 60p/day SC.

We are keeping hire charges the same for now, but will be reviewing in April next year.

Sea_Shell

Mister_G said:

As a Trustee, I manage our small business Village Hall electricity supply (no gas).  We are currently on a 4 year fix at 14p/unit + 26p/day SC, which expires in December.  We use about 4000kWh pa.

I have recently negotiated a 3 year fix starting in December, but at 42p/unit + 60p/day SC.

We are keeping hire charges the same for now, but will be reviewing in April next year.

So an increase of almost x3 (by my maths🙄)

Interesting that you were able to negotiate.   What did you get them down from?  Did they have an opening "bid"?

Mister_G

I went to several different suppliers and energy brokers.  Prices varied considerably from 50p down to the 42p we ended up with.  This was with EDF in the end.

Sea_Shell

Interesting, thanks.

I wonder for how long suppliers will want to quote (complete) for new business?


I understand "broking" from an insurance POV.

Sea_Shell

Pubs hitting the headlines again this morning ☹️

BBC - "At The Plough in Essex, landlord Simon Cleary said his energy bills have spiralled from £13,000 to £35,000 a year.

He said the pub needs to generate a further £1,800 in weekly takings to cover the costs. "It really is that bad," he told the BBC."

Sea_Shell

Calls for help are growing...

BBC

"Businesses "will close their doors this winter" if they are not given support with soaring energy bills, the head of the British Chambers of Commerce says.

Baroness Ruby McGregor-Smith said the government needed to provide measures on the same scale as at the height of the Covid pandemic to help firms."

https://www.bbc.co.uk/news/business-62764121


I'm a little surprised that this thread hasn't had more responses.

Or maybe business owners don't read MSE, they're too busy running their businesses 😉🤔

shinytop

Sea_Shell said:

Calls for help are growing...

BBC

"Businesses "will close their doors this winter" if they are not given support with soaring energy bills, the head of the British Chambers of Commerce says.

Baroness Ruby McGregor-Smith said the government needed to provide measures on the same scale as at the height of the Covid pandemic to help firms."

https://www.bbc.co.uk/news/business-62764121


I'm a little surprised that this thread hasn't had more responses.

Or maybe business owners don't read MSE, they're too busy running their businesses 😉🤔

I don't own a small business but like domestic users they are going to have to make some changes as well as getting some government help. 

OH and I went to a pub last month when the outside temperature was 35 deg C;it was too hot to sit out so we went in. We sat down next to a radiator that was roasting hot. I appreciate that this was a sample of one but I doubt most pubs and restaurants have ever thought about saving energy because it has been so cheap.