Price, Performance & Payment: 'three Ps' to consider before you can tick your energy box with confidence

Monday, November 02, 2015

The fall in petrol prices has grabbed the headlines recently, but the reduction in electricity prices slipped under the radar and has gone almost unnoticed by commentators and the media.

At the time of writing, wholesale electricity prices are at a three year low and the majority of Northern Ireland’s small and medium sized businesses are paying less than they were in 2008!

Of course this doesn’t mean that everything is rosy in the energy garden. While for the majority of businesses here prices are similar to those in the Republic of Ireland and close to the EU average, for a small number of very large users a significant price gap exists between here and in the Republic of Ireland. This is one of the big issues exercising the minds of energy policy makers on both sides of the border at the moment.

Energy remains a significant overhead for many businesses and unless you apply the same rigour as you do to other costs, you risk becoming uncompetitive through lack of knowledge, bad choices or just plain complacency.

There are ‘three Ps’ to consider before you can tick your energy box with confidence; they are Price, Performance and Payment.

Price

Let’s start with Price. At contract renewal time how many of us take the time to shop around to make sure we are getting the best rate? And what type of deal is best for your needs? Is now a good time to fix prices, or do you take your chances with a market tracker product? Does green energy offer any benefits over traditional brown energy? If you switch supplier how will it impact on bill clarity and after-sales service?

As with all decisions in business there is an element of risk involved, but at least if you go in with your eyes open and ask the right questions you are in with a better chance of getting a good deal.

Performance

Next is Performance, the way that you use the electricity in your business.

We all know that being energy efficient can make a big difference to our bills. Low energy lighting, wall and loft insulation and energy efficient appliances are all tried and tested ways to save the pounds . But for many, being switched on to saving energy is no longer enough.

There has been a huge increase in the number of homes, farms and businesses embracing renewable technology and generating their own electricity by fitting solar PV panels, wind turbines or digestors.

In addition to reducing their bills, many of these savvy operators are also able to take advantage of generous government incentives and earn extra money from selling energy certificates (ROCs).

However, recent changes in legislation have brought an end to incentives for new wind turbine installations.

Payment

The last P is Payment. Like most other utilities, energy suppliers prefer Direct Debit as it ensures that payments are almost always made in full and on time.

Most suppliers offer incentives to customers who pay this way, so if you aren’t already paying by Direct Debit you are almost certainly missing out on discount. Some suppliers also offer additional discount for online paperless billing.

Looking forward, despite the growth of renewable energy locally, most of our electricity is still generated from fossil fuels and we remain a small island, at the edge of Europe, exposed to price fluctuations on volatile world fuel markets.

So enjoy this period of lower prices while it lasts, shop around to get the best deal for your electricity and use it as efficiently as possible.

Do you use more than 50,000 units a year (over £2,000 a quarter)? Get a quote from Power NI and see just how much you could save!

This article features in the November issue of NI's Business First magazine here.