How To Negotiate The Best Business Energy Deal

Ready to learn some effective tips on negotiating a better business energy deal?

Differences between energy rates are one of the key deciding factors between switching suppliers, but since this tends to be a tedious process, many business owners prefer to stick with their current gas or electricity suppliers, and end up paying more for their business energy supply than they should.

In reality, negotiating better rates for your energy bills with your current supplier can give you a far better deal, and this is another option to switching. First, let us understand how business energy contracts work.

Like with anything the more knowledge you have, the more effectively you can operate.

So here goes.

What’s in this guide?

How business energy contracts work

The majority of small and medium businesses sign fixed energy contracts with suppliers for lengthier terms of up to five years. This means that you pay a set unit price for the specified term to the contractor.

Before the contract ends, you get the chance to renegotiate the price, failing which you will be placed on a rollover contract at the standard tariff.

Each business energy contract has a termination period towards the end, during which you can cancel the contract. Information regarding this is provided by some suppliers on your monthly invoice but if not, then begins the often cumbersome task of contacting the customer service team to cancel your business energy contract.

To get a quote from a new energy supplier you typically need to provide:

  1. Recent business energy bills or annual energy statements
  2. Business address
  3. Information on contract dates

How to negotiate the best energy deal for your business

Many businesses have lost large amounts of money because they haven’t even bothered to negotiate on energy rates. Most suppliers are willing to negotiate on energy rates and provide a customised deal in order to retain clients.

Even if the rates remain fixed, there are offers, better equipment, (for example – installing equipment like a smart meter) or other incidentals that can be tweaked in order to optimise your spend on business energy. Here is some helpful information that can help you negotiate the best energy pricing rate for your business and cut down on your gas and electricity bills.

Benchmark business energy price 

As a starting point, begin by setting a benchmark to know whether your saving goals for your business energy bills are realistic. Explore and compare the average prices per year offered by a few suppliers to set the best benchmark rate to target. This is key to negotiating a good business energy contract, and to avoid get cheated on energy bills or contracts.

Energy prices can vary from year to year so it is important to know the currently prevailing market price. The easiest way to get a benchmark price is to ask your current supplier and a handful of others. Price comparison websites are also a good way to set a benchmark price and find the best deal.

Auto Switch Services

Don’t have the time to do the groundwork? There are services that can do it for you! Auto switching services are a popular new addition to the energy market, that can not only help you to set a benchmark price, but also manage the process of switching over to a new energy supplier.

Most services run an end-to-end process that includes comparing the best gas and electricity deals, to finding a good quote and even switching your energy supplier (only with your permission) to a supplier who gives you the best deal.

If you prefer not to use an auto-switching service, at least consider investing in upgraded equipment for your business, like a smart meter, which will accurately read your gas and electricity usage.

Review your Contract Length 

If you are considering switching business energy suppliers, then you should first have a look at the length of your energy contract. This is to know whether you are timing the switch best in order to pay less in termination / cancellation fees, and also whether you are switching at a time when business energy rates are lower than usual. Contracts are usually up to a period of five years.

Choose the correct energy tariffs 

Business energy tariffs are generally of two types – fixed and variable, and should be factors you take into consideration when planning to reduce your energy bill. Variable tariffs are also called standard tariffs and change when the supplier decides to change their prices.

Your electricity supplier will most likely be on a variable tariff so if you have been with your supplier for a while, it is possible you too are on a variable tariff. The one advantage of variable tariffs are that they are subject to price capping and have an upper limit. However, many new companies offer variable tariffs without the contract tie in period.

A fixed tariff is the amount you pay for each unit of energy used over a certain time. Here, you pay a certain fixed amount which will not be affected by price changes, but you will be locked into a contract and will not benefit when energy prices drop.

Choose the right electricity plan that will take advantage of the prices of energy over time, but will also give your business the flexibility to switch suppliers, should you need to in the future.

Be charming

As a customer, you should also remember that it is in your supplier’s best interest to charge you as much as possible for electricity, since your supplier is also running a business, and it is likely that the company’s sales team works on the basis of sales commissions.

This is where human nature can intervene, and charm can often work as a negotiation tactic. Be honest with your energy supplier, remind them that you are a longstanding and responsible customer.

Ask for the best deal that your supplier can provide for your business, based on what you can afford to pay for electricity, and mention that you have seen other companies providing better rates. You are likely to get a better variety of energy deals using this tactic.


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