How to negotiate energy contracts for your business

Tips and How-To 2nd May 2023

As a business owner, you will know that navigating the energy market can be challenging, with various providers and contract types to choose from. However, understanding how to negotiate energy contracts for your business is crucial to ensure that you get the best deal and avoid any unnecessary costs. In this blog, we will guide you through the process of negotiating energy contracts, covering key terms and steps to take.

Let’s get jargon busting

Before we dive into the specifics of energy contracts, it’s essential to understand some of the key terms that you may come across in the process.

kWh: Kilowatt-hour is the standard unit of energy consumption.

Standing Charge: This is the daily charge that you pay regardless of how much energy you consume.

Tariff: This is the rate at which you are charged for your energy usage.

Renewal Notice: A document from your energy provider that outlines your current contract and the options available for renewal.

Deemed Rate: This is the rate that you will be charged if you don’t have a formal contract in place with your energy provider.

Step 1: Understand Your Energy Usage

The first step is to understand your energy usage. This will help you determine the best contract type and supplier for your business. You can do this by looking at your energy bills and identifying how much energy you use each day, week, or month. Once you know your consumption, you can compare it with the quotes you receive from suppliers and make an informed decision.

Step 2: Compare Suppliers

There are several energy suppliers in the UK, and it’s essential to compare them to find the best deal for your business. You can do this by looking at the tariffs, standing charges, and other fees that each supplier offers. Some suppliers may offer fixed-rate contracts, which means that your tariff will remain the same throughout the contract term, while others may offer variable tariffs, which means that the rate can change based on market fluctuations.

Step 3: Negotiate the Terms of the Contract

Once you have identified the suppliers that offer the best deal, it’s time to negotiate the terms of the contract. You can do this by contacting the supplier directly, through a broker or energy consultancy. A consultancy, like us, can negotiate on your behalf, taking into account your energy usage, budget, and other requirements. It’s important to negotiate a contract that suits your business needs, with competitive rates, a suitable contract length, and manageable exit clauses.

Step 4: Review the Renewal Notice

When your contract is coming to an end, your energy supplier will send you a renewal notice outlining the options available to you. This is an excellent opportunity to negotiate a better deal, as you can compare the renewal rates with those offered by other suppliers. If you’re happy with your current supplier, you can contact them to see if they can match or beat the renewal rates.

Step 5: Monitor Your Energy Usage

Once you have negotiated a suitable energy contract, it’s essential to monitor your energy usage regularly. This will help you identify any inefficiencies and take corrective action to reduce your energy bills. You can use energy monitoring tools to track your consumption and identify areas where you can save energy and money.

We can help you

Negotiating energy contracts for your business can seem daunting and time-consuming. This is why at Lumina Energy we do the hard work for you.
Working with you, we’ll discuss your current contract, energy usage and spend, then, using our network of trusted energy suppliers, we will do the leg work by searching the market and securing you a competitive deal that meets your business needs.

By working with us, you can potentially reduce your energy spend and help towards your carbon footprint, making your business more sustainable in the long run.