Date published: 01.09.08 - not release date

Fuel Poverty Looms as Small Businesses Brace Themselves for Spiralling Energy Costs

Research shows that almost 1 in 5 small businesses spend more than 10% of annual turnover on energy bills with a further 22% approaching the threshold. Contractual confusion and supplier switching inertia has resulted in unnecessarily high electricity bills for small businesses. Electricity4Business urges smaller businesses to take control of their energy spend by shopping around for the best deals.

London, May 21st, 2008 – Electricity4Business, a supplier of cheap electricity specifically for small and medium sized businesses, has commissioned independent research that analyses the financial impact of rising energy bills for UK companies. The study shows that a staggering one in five small UK companies of less than 20 employees – over a million businesses in total – are operating in fuel poverty (i.e. spending more than 10% of annual turnover on energy bills) . A further 22% of companies are following closely behind with between 5 and 10% of turnover going on energy costs and these businesses are set to imminently break through the fuel poverty threshold as a result of rising wholesale energy prices.

The independent research, which was conducted on behalf of Electricity4Business and questioned over 1000 small businesses across the UK, also showed that spiralling energy bills have now become the second biggest cost for these companies, behind staff wages and recruitment costs and ahead of premises / rent, equipment and insurance. In the face of economic downturn, it is particularly these smaller companies that are under increasing pressure to remain profitable, and controlling business costs such as electricity is the key to staying afloat.

The wholesale energy price, which has increased by 22% since January 2008, is driving this significant increase in bills and more pressure than ever before is being put on a business’ bottom line. However, smaller companies in particular aren't doing all they can to avoid these spiralling prices according to Electricity4Business’ research – only 1 in 5 know when their contract is up for renewal and 51% claim that they don’t read the small print of their Terms and Conditions so remain unaware of their contractual obligations.

Jonathan Elliott from leading B2B comparison website MakeItCheaper, commented: “According to consumer group, Energywatch, one in six households are living in fuel poverty but here we are facing a situation where actually one in five small businesses, with the potential for many more, are forced into a similar situation. However, businesses aren't helping themselves and a lack of understanding about contractual obligations and not enough shopping around for cheaper quotes when contracts come up for renewal is costing these companies dear. By understanding their contract and benefiting from the support available from alternative suppliers and industry bodies, businesses can reduce the financial impact of high energy bills.”

The confusion around contracts is clear and may account for customers’ inertia. Electricity4Business’ research also shows that over half of the businesses questioned from a range of sectors including catering, IT and communications, education, business consultancy, leisure and tourism, marketing and retail, claimed that they aren't currently in a contract with their electricity supplier. 18% have no idea if they are under contract or not and say that they ‘just pay the bills’ and worryingly, almost a third (32%) do not understand the breakdown of their electricity bill. When these same businesses try to switch to another supplier of choice, they find they are prevented from moving and discover they are indeed, in a contract. Electricity4Business claims that this is down to confusing pricing policies employed by the ‘Big Six’ energy suppliers.

“There is no doubt that some of the contracts supplied to small businesses are confusing and it is not surprising that many companies are either unaware that they are in a contract or don’t understand how their bill works,” comments Graham Paul, Sales and Marketing Director at Electricity4Business. “It is crucial that businesses understand the point at which their contract comes up for renewal so they can shop around and avoid being rolled over into an ‘evergreen’ contract at a higher unit price, and this is why we commissioned the study. This research shows that only 20% know when their contract is up for renewal but perhaps most worrying is the fact that 43% believe that their energy supplier is dishonest with them due to some of the tactics employed, which is something we need to address.”

Electricity4Business is leading the fight against increasing energy costs for its customers and is committed to helping businesses understand their contracts. The company is attempting to demystify the electricity market for its SME customers through Even 12 billing. Even 12 ensures customers pay the same monthly amount for electricity meaning they can plan yearly budgets and aren't subjected to seasonal ups and downs.

For interviews, quotes, images or comments contact:

Emma Churchill
Communications Executive
E4B
Phone: 01908 353358
Email: echurchill@electricity4business.co.uk

About E4B:

Electricity4business is Britain's independent electricity retail company specialising in the supply of business electricity to small and medium sized businesses. E4Bs aim is to cut the cost for British business by offering lower prices.