What can affect business energy prices?

A basic law of economics, prices can go up as well as down, but there is more than a supplier looking to make a quick buck that can affect the business energy prices quoted. The following list highlights what can affect your energy bill.  It may help you to predict when is a good time to look to switch suppliers:

Broker Margins

Using a broker to switch your energy may mean paying up to 40% more than you should be. Brokers take the base fee from the supplier and add a margin, often without telling you how much. The result is every time you switch on a light or turn on a till, anywhere between 10% – 40% of the bill you pay, goes directly into the brokers’ pockets.

The easiest way to avoid this is to use troocost.com. We do not add anything to the tariff we get from the supplier. Instead, we are paid a flat, fully disclosed fee from the supplier for the new supply contract. Little wonder that we always beat broker prices.

 

Wholesale Prices

Unsurprisingly wholesale energy prices of oil, coal and gas have an effect on the price you pay.  It is a fact that since 2004 Britain has consumed more gas than it produces. Gas prices and the price of oil which is directly related to the gas prices are increasingly under pressure from world events. Conflicts in the Middle East, the shutdown of a Japanese reactor following an earthquake, the repair of a gas supply pipe from Europe can all affect the supply and demand. As a large proportion of electricity is generated by burning gas, anything affecting its price will have a direct effect on the price you pay.

Not much you can do about these, apart from avoiding these events, if you can. Although, choosing a shorter contract could prove beneficial by possibly minimising their effects.

 

Energy Market Reforms

In 2013 Ofgem and the EU launched Energy Market Reforms aimed at updating the UK’s largely old and outdated infrastructure. The upshot of this is a big bill that needs to be paid and this is to be largely passed on to the consumer. The energy market act 2013 included the introduction of two reforms namely contracts for difference (CfDs) and The Capacity Market. Both of these have and will continue, to result in higher tariffs.

Again, not much you can do about these. It’s the price we have to pay for cleaner, more sustainable energy.

 

Location

It may come as a surprise but where you are located can affect the rate you pay for your energy. There are three main things that influence how much energy will cost in a given area. These are:

  • How much energy that a supplier sells in that region
  • The quantum of energy that a supplier buys from the generators in that region
  • The total charges that the local distribution networks put onto your energy supply.

So, each supplier may have a different tariff, depending on your location, so it’s always worthwhile to shop around.

 

Supply and Demand

That good old staple of economics, supply and demand, not surprisingly, have an impact on the price you pay. This can be simply down to colder weather or, the rush to buy renewable energy before supply can catch up. It has been estimated that oil will run out in 53 years, natural gas in 54 and coal in 110, but the advent of fracking and new technologies has extended these estimates.

Again, not much you can do about this one, but a close eye on the market and when you perform your renewal, may pay dividends.

 

Your Trade or Profession

Your chosen trade or profession can also affect the price you pay for your energy. Some industries, such as the pub trade, can struggle to get competitive rates. Your credit rating can also have an impact, a poor score can often lead to higher rates or a bond to cover the supplier credit risk.

It pays to keep on top of your credit score, but these things are not always possible to manage.

  

Summary

There is a lot that can affect your energy cost and, with most of them, there isn’t a great deal you can do to avoid them.

The best advice we can give is to shop around and avoid broker margins wherever possible.

That’s why we developed troocost.com, an easy solution that does all the hard work for you and doesn’t hide its fee in the unit rate.