State of the energy market 2018 review

State of the energy market 2018 review

Ofgem have announced the release of their State of the energy market 2018 review.

Their second annual assessment of the state of energy markets in the UK, the report focuses on developments over the past twelve months.

Ofgem regulates the UK’s gas and electricity markets, to protect the interests of current and future domestic and non-domestic consumers.

With the report clocking in at a bumper 109 pages, and small and micro businesses featuring heavily throughout, we’ve summarised some of the key facts and figures below.

Many small and micro businesses are paying too much for their gas and electricity

A significant number of micro businesses (24% in gas and 27% in electricity) are on expensive out-of-contract rates. This occurs when a business moves into new premises and start to consume gas and/or electricity without agreeing a contract with a supplier (this also applies when an existing contract comes to an end, but the business continues to consume energy).

The importance of negotiating an energy contract was made clear when, in analysing data from Q1 of 2018, micro businesses on deemed contracts were found to have paid around twice as much for each unit of gas and 70% more for each unit of electricity in comparison to micro businesses on negotiated contracts.

Smaller businesses continue to pay significantly higher prices than others

When compared with larger businesses, the price of electricity paid by micro businesses was 35% higher and the price of gas was double.

This is because smaller businesses are typically on fixed-priced contracts, with standard terms and conditions. Larger industrial businesses are metered half-hourly and many have the flexibility to ‘load shift’ energy consumption to an alternate period outside of peak hours when prices are lower (something we’ve covered before).

More businesses are reaping the benefits of working with brokers

Ofgem’s report stressed that energy brokers have become an important way of helping small and micro businesses to shop, switch and make savings on their existing energy contracts. 67% of those who switched tariffs or suppliers last year used a broker and 42% said the broker was their main influence.

Ofgem’s non-domestic survey also showed some signs of improvement in the level of energy engagement for small and micro businesses, either through switching suppliers, tariffs or comparing deals – showing a small rise from around 66% in 2016 to 68% last year.

More businesses are switching their energy supplier

The number of suppliers available to businesses is higher than ever before. In the last 12 months, we’ve seen the number of active energy suppliers rise from 60 to 73 (a growth of 21.7%). This has surged the levels of competitiveness in the market, resulting in improved contract rates enticing businesses to switch.

Whilst most UK businesses remained with their existing supplier, the amount who switched rose from 21% to 24%.

More businesses are comparing prices before signing a new contract

A higher proportion of UK businesses compared prices across numerous suppliers – rising from 45% to 48%. As firms become more educated on the potential savings on offer, and the variety of suppliers available to them outside of the “big six”, this trend is forecast to continue moving forward.

Most businesses are happy with their supplier, but not to the point of recommending them

Ofgem’s survey found around two-thirds of small and micro businesses were satisfied with the overall service provided by their current supplier, however, it was very interesting to see that only 17% of those firms would recommend their energy company to others.

Am I getting the best deal for my business?

A recurring theme throughout the report is that small and micro businesses are still not doing enough to get the best deal on their energy.

Here at Great Annual Savings (GAS), our team are experts at finding the RIGHT deal for your business. We’ll do all the hard work for you, from negotiating with suppliers to completing all the paperwork on your behalf.

Simply call us today on 0800 130 3514 for a quick, no obligation chat.

For more hints and tips on switching business energy, check out our definitive 8 things you need to know guide.

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