After securing your premises (as covered in [Securing Your Premises]), your utilities—electricity, gas, and water—become a significant operational cost. Unlike domestic energy, commercial contracts are complex and often lack the same consumer protections. Managing this effectively means understanding your contract terms and committing to simple, ongoing efficiency measures that support your [Net Zero Goals].

1. Contract Management: Avoid Costly Traps

The single biggest factor in controlling energy costs is proactively managing your contract. Never let an existing contract expire without switching or renegotiating.

A. Understanding Contract Types

• Fixed-Rate Contract: You pay a fixed price per unit of energy (kWh) for the entire duration (typically 1–3 years). This provides certainty for budgeting and is the most popular choice for SMEs.
• Variable-Rate Contract: The unit rate changes based on the wholesale cost of energy. This offers flexibility but exposes your budget to market volatility.

B. The Rollover Trap

This is the most common and costly mistake. If you fail to agree to a new contract before your current fixed-rate deal ends, your supplier will often automatically place you on a Rollover Contract or a Deemed Contract at significantly higher rates.

• Action: Suppliers must notify you when your contract is nearing its end. As soon as you receive this letter, use the cooling-off period to compare quotes and negotiate a new deal.

Recommended Suppliers & Comparison Tools

When comparing, seek quotes from both the major traditional players and newer, green-focused suppliers.

• Major Suppliers: Check established providers like British Gas Business and EDF Energy Business.
• Green/Challenger Suppliers: Look into options like Octopus Energy for Business which often offer 100% renewable tariffs.
• Comparison Brokers: If time is scarce, use a reputable broker or comparison service like Uswitch for Business or MoneySuperMarket Business Energy to compare rates across the market quickly.

C. Check Your Bill for Savings

Review your bill to ensure you are not paying the standard 20% VAT. Many small businesses qualify for a reduced 5% VAT rate if their consumption falls below a certain threshold. If you believe you qualify, contact your supplier immediately.

2. Actionable Steps for Energy Efficiency

Reducing consumption is the only way to lower your bill regardless of the unit rate. Focus on these simple, no-cost actions and small investments:

Focus on Heat Loss

Space heating accounts for the largest portion of non-domestic energy use.

• Draught-Proofing: Block unwanted gaps around windows, doors, and floors. This is one of the quickest, cheapest ways to prevent warm air from escaping.
• Use Controls: Set heating systems to automatically turn off overnight and on weekends. Set office thermostats to a comfortable but efficient 19°C.
• Maintain Equipment: Have boilers and air conditioning units serviced regularly to ensure they run efficiently, saving you money in the long run.

Optimize Lighting and Equipment

• Switch to LED: Replacing traditional bulbs with LED lighting can cut your lighting bills by 40% or more. This investment usually pays for itself quickly.
• Turn it Off: Encourage a strong team culture where everyone turns off monitors, printers, and lights when leaving a room or at the end of the day.
• Get Smart: Ask your supplier about installing a smart meter. This provides accurate data on consumption, putting an end to estimated bills and helping you pinpoint where you use the most energy.

3. Support and Next Steps

You don’t have to tackle energy costs alone. Free advice and funding are available to help SMEs invest in long-term efficiency.

• Free Advice: The Energy Saving Trust provides free, expert advice and guides for businesses on how to reduce consumption.
• Financial Support: For larger upgrades (like insulation or heat pumps), check the GOV.UK business finance and support finder, and ask your local council or Coast to Capital Growth Hub about regional grants and low-carbon financing options available for efficiency projects (as highlighted in [How to Make Your Business More Sustainable]).

Our advice: Set a calendar reminder 60 days before your fixed-rate contract expires. Use that time to get quotes from at least three different suppliers or a reputable broker. This simple action can save your business thousands of pounds.