When we talk to our customers, one of their most common concerns is how to fit energy costs into their overall budget and plan for the long term.Planning energy costs can be a challenge. Demands on energy are unpredictable and can be affected by several variables. One factor is weather conditions – the unexpected cold snap from the ‘beast from the east’ in February 2018 saw demand rise, for instance. Equally, the busier your organisation is, the more energy you’re likely to use: more employees in the office means more computers on, as well as more regular use of printers, photocopiers, kettles and a host of other appliances. More energy intensive organisations might also vary their energy usage depending on product demand.
Third party costs
Even if you know roughly how much you’re likely to spend directly on energy, a large proportion of your bill – up to 60% – is made up of third-party costs, which differ depending on the type of fuel you’re using. These cover the costs of delivering the energy to your business through the different available channels, as well as helping meet the costs of government subsidies around sustainability and security of supply. Find out more about these costs in our online guide.
Budgeting for energy is tricky. But there are steps you can take to minimise any unpleasant surprises when your bill comes through. Here’s how.
Keep energy use consistent
Energy use varies throughout the calendar year and according to the demands of individual businesses. For example, there’s a good chance you’ll use less energy in the summer months than the winter months. Similarly, each organisation will know when their “busy times” are – for accountants, that could be quarter end, while manufacturing companies might see a surge in power needs in the lead up to Christmas as they ramp up production. We’d expect most offices to see reduced staff numbers in summer as they take time out to go on holiday, so there’ll be less pressure on appliances and therefore lower energy usage. This means you can roughly calculate the ratios of energy use at these points in the year.
Use this insight to help your business even out the peaks and troughs of energy needs and plan your usage accordingly. Could you complete some tasks that require higher energy consumption in the quieter summer months? One example might be scheduling building or renovation work for the summer, to avoid using more in winter, when you could be hit with premiums relating to peak demand.
Lower your overall energy usage
We’ll focus more on how to save money on your energy elsewhere in this series, but it’s worth looking at steps you can take now to simply use less energy, as keeping consumption low from the outset can help you avoid those spending highs and lows. Think about how you use energy in your office and try to identify ways you can cut down. For example, could you do a tea round, rather than having everyone make their own individual cups of tea? This could cut down on the number of times you’d boil the kettle, thus reducing energy usage.
Additionally, are you doing all you can to empower your team to become more energy efficient? We often underestimate how much individual behaviour can impact the final bill. Read our recent blog to find out how you can do this.
Fix your contract
Another way of making your energy bills more consistent is to sign up to a fixed tariff.
Most energy suppliers allow you to fix all or part of your costs. You can opt for a contract that lets you fix your direct energy costs. This helps shield your business from wholesale market fluctuations, so you don’t have to worry about the price of gas or electricity going up for the length of your contract. However, it’s worth remembering that non-commodity costs (NCCs) wouldn’t be fixed with this type of tariff.
For an additional premium, fully inclusive contracts are also available with some suppliers, where all existing NCCs, which can change in line with market movements, would be fixed for the length of your contract. This means that you won’t have to worry about additional or changing costs for the duration of your contract – if the costs rise, your energy supplier will cover any increase.
The message is clear: it is possible to budget for the long term when it comes to energy. Follow our advice and take control today.
Fixed and fully fixed tariffs are available from SSE Business Energy. To find out more about these, visit our website.