By Mark Eccles, general manager at Gazprom Energy
With Ofgem’s Faster Switching Programme well underway, improving the process of switching from one energy supplier to another is clearly high on the government’s agenda. For a long time Ofgem has encouraged competition among suppliers for the benefit of energy consumers, and this initiative aims to take those benefits further by making it easier to change suppliers when desired.
Despite these efforts however, it seems that looking for a new energy provider is something many businesses aren’t confident doing. Research shown by the Competition and Markets Authority found that one in every three businesses don’t know where they can find information that will help them choose the right supplier moving forward. In reality, fears of not taking the best approach when switching suppliers can be allayed with a few simple steps.
One common concern among businesses is that energy supply could come to an abrupt halt during the switching process if things don’t go according to plan. But the truth is that regardless of where a business is at in its switching process, or how smoothly the switch has gone, businesses will always have access to gas and electricity. No provider is able to ‘cut off’ an energy supply during the switching process. Another concern is the prospect being faced with overlapping costs if the supplier switch does not run smoothly. However, as long as businesses take a proactive approach to the key processes required for a successful switch, they can ensure these issues are avoided.
Here’s what you need to do.
- Check your meter reading The first thing an organisation should do when leaving a supplier is take a meter reading so this can be shared with both the incumbent and new supplier. There’s a chance that an energy customer gets charged by both providers for the same energy supplied, but that can be avoided. With an accurate ‘opening’ meter read, the billing with the new supplier will get off to a good start. And having a final meter reading also means a customer has a strong case for questioning their existing provider if a bill seems higher than it should.
- Be aware of key dates Knowing the existing provider’s contract renewal date and the new supplier’s start date is critical when it comes to ensuring the business doesn’t pay unnecessary costs. Failing to switch to a new supplier when the existing contract comes to an end will mean having to pay the outgoing supplier a deemed tariff – the higher rate of charge customers have to pay when a contract isn’t in place.
- Communicate contract signings Given that small businesses may rarely have a dedicated energy manager, it’s possible that more than one person might take responsibility for signing a new energy contract without communicating that they have done so. Energy brokers calling small businesses with an offer could exacerbate this because it’s a case of whoever picks up the phone. It’s crucial to ensure that the decision to switch suppliers is shared, to avoid the risk of the business ‘doubling up’ on suppliers.
- Stipulate the desired billing approach Organisations with more complex energy needs, or those which have experienced significant growth or plans to expand, should make sure they consider the full impact of switching suppliers. For example, a larger organisation may have developed a specific approach to billing. When they come to switching they shouldn’t assume that a new supplier will be able to offer exactly the same service.
An existing energy supplier might send one overall bill to the finance department and site-specific bills to separate individuals at those locations. This may be to support business processes such as financial reporting and energy monitoring. It’s important to ensure that a new supplier will be able to replicate these processes, so that tariff or contract savings are not outweighed by new, unwanted process complexities.
Stipulating the desired billing format in your supplier requirements document when looking for a new supplier will help to avoid this.
Businesses don’t need to be concerned about the risks of switching energy suppliers as long as they take a well-planned and measured approach. Ofgem’s Faster Switching Programme should soon make being hit with avoidable costs and suffering time-consuming processes a thing of the past. In the meantime, businesses moving suppliers should be extra cautious to ensure that they don’t make themselves vulnerable to risk. It all comes down to knowing the ins and outs of their current and future energy contract and the relevant internal processes, in order to make the switch as smooth and as seamless as possible.