There are over 2.45 million meters needing electricity and gas at business premises throughout England, Scotland, Wales, and Northern Ireland. The deregulated market has witnessed an explosion of new entrants to the market which in turn has seen competitive retail prices among all the well-known and independent suppliers.
Meter data collection is an area moving through a major upgrade. Businesses already using half-hourly meters with a profile class of "00" have been using this system since its inception.
So-called max-demand customers with profile classes 05,06,07, and 08 moved towards this system after the P272 legislation from the industry regulator Ofgem.
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That just leaves the majority of small business premises to transition over to this new type of meter.
UK government official statistics show the large energy providers installed over 745,000 smart and advanced meters with the smaller suppliers connecting over 65,000 meter types.
If you're thinking of switching, what are the differences between the different companies that could supply energy to you? Below is the list of the so-called "Big Six" that control the majority of the market.
1. British Gas
Perhaps the most well-known player in this market is British Gas Business (BGB). Owned by public company Centrica, its historical positioning provides services to most companies in the commercial gas market. Through its industry dominance, they're now also the largest company supplying electricity to UK businesses. Although residential customers are leaving to the smaller independent companies, BGB still maintains competitive pricing in its commercial division.
The SME market usually just has one type of tariff on offer - a fixed term, fixed price agreement. Larger users of power require different options and BGB provides some flexibility in its procurement plans. Many want the ability to purchase energy at market spot prices under their terms, and BGB offers a form of transparent pricing. You can use their trade desk to buy, use, then sell back unwanted plans to balance your consumption against any financial risk.
2. E.ON Energy
One of the world's largest utility providers is German-based E.ON who is the second largest company in the UK electric market for business premises. Formally known as Powergen, they derive most of their revenues from the Third-Party Intermediary (TPI) or broker division rather than direct sales.
E.ON has a diverse portfolio of flexible buying methods and helps optimise market-driven purchasing needs. For those that generate their own power either through renewables or generators, E.ON manages what they call a "Virtual Power Plant" or Demand Side Response Network. This service helps maximise your returns, reduce your net costs, track your generation assets, and maintains flexibility in the marketplace.
Another German-owned power company is RWE npower that is the fourth largest company in the commercial market by customer account volume. Their parent company is Innogy a publicly traded entity on the European Xetra Dax exchange with a market capital value of over €20billion.
Medium to large size companies have a vast selection of buying and consulting services available to them from the team at npower. Apart from the standard fixed-priced contracts, you also have various options to manage risk on the wholesale market. There's a whole host of flexible procurement products from basic purchasing to sophisticated products either based on forecasts, seasonal "clips", or residual trades.
4. EDF Business
Number five in the commercial arena is French state-owned Electricite de France (EDF). This company is part of the consortium that won the bid to build and run the new Hinkley Point C nuclear power station in Somerset. They're one of the largest home-based generators of energy specialising in nuclear with eight operational plants around the UK.
EDF provides an impressive array of products that promote lower carbon emissions because of their fuel mix credentials. There is no price premium for opting for their low carbon "Blue" tariff where over 75% of generated power produces zero carbon. All customers receive in-depth market intelligence and analysis via their online "Insight" portal. The data helps large consumers navigate their way through fluctuations when buying energy commodities in this complex marketplace.
ScottishPower is the smallest of the Big Six when it comes to supplying business customers in the UK. It's a wholly owned subsidiary of the Spanish-based utility company Iberdrola. It's Glasgow headquarters runs the operations including power generation from Europe's largest onshore wind farm at Whitelee near Glasgow.
Large corporations receive a more consultative approach rather than a self-service solution which could assist you with saving energy more efficiently. From site visits, chargeable consumption audits, and implementation management from the findings, this turnkey service is a different type of solution in an overcrowded market.
6. Scottish and Southern
SSE Plc makes up the last Big Six energy company but is the third largest in the corporate sector. It's a publicly traded company on the FTSE with headquarter in Perth, Scotland. Its brands include Southern Electric, Scottish Hydro, SWALEC, and Airtricity.
SSE pushes its green credentials hard to satisfy Renewable Energy Guarantees of Origin (REGOs) using their onshore and offshore wind farm generation capacity. You can also opt for the more traditional contracts using fixed or flexible pricing and term durations. An experienced trading team helps with the buying process offering real-time market access or seasonal risk mitigation plans. To begin your journey, you need to contact them rather than signing up online.
Business Gas and Electricity Suppliers' Fuel Mix
Depending on the type of fuel your provider uses and how this generations affects the environment from carbon emissions could influence your buying decision. Below are the latest statistics reported to OFGEM and pictorially summarised on the SSE website.
Fuel Mix Table
|Company||Natural Gas||Coal Fired||Renewable||Nuclear||Other|
Data source: Supplier websites and CommercialElectricity.co.uk analysis.
Comparing business electricity suppliers online
You could make substantial savings by switching your current supply to another provider. In a deregulated market, simply getting up to date rates for the cheapest tariffs should keep your bills low. Your provision will not be interrupted during the switching process.
If you manage your account online or pay by monthly Direct Debit, then additional savings are available from most suppliers up to 6%.
Switch and reduce costs
If you simply stay with your current supplier without renegotiating your contract, then your prices are likely to increase as you'll enter into a rollover contract. You must get new rates each year even if you want to stay with your current energy company.
By getting a quote, you'll find the best available prices. Bear in mind the cheapest rates are usually only available online. Comparison websites usually provide the Big Six energy suppliers' tariffs together with some independent companies.
You could also visit each website in turn for an individual online quote.
Average kWh prices since deregulation
Since the deregulation of the Energy Industry in the UK in the late 1990s, energy prices have become dependent on the global supply market. The UK energy industry employs a traded market position. This strategy was not the case before 1998 when government monopolies existed in the energy supply.
The UK government still has a major role in meeting the energy demand of businesses despite the deregulation. The industry watchdog OFGEM also plays an important part in regulating market prices and competition.
The UK is not only a consumer of energy but is also a producer. In 2006, the UK was the world's ninth-largest consumer of energy and the 15th largest producer. In 2007, the UK had a total energy output of 9.5 quadrillion BTUs (British Thermal Units) from oil, natural gas, coal nuclear and renewables. Production has declined over recent years with the UK now a net importer of energy. This position makes the country more susceptible to price fluctuations in the market.
The fluctuation of energy prices
The price of energy supplied to UK markets is more volatile and has fluctuated over the last ten years with an upward trend.
The amount your business pays for energy depends on the type of fuel you use, your bargaining power as a user, the length of your contract, and external factors such as crude oil prices.
Fluctuations in the price of crude oil affect the prices of domestic and industrial fuels in the UK. The price of crude oil changes for a variety of reasons including:
- Oil shortages (1973)
- Political instability (1990/1 and 2016)
- Over-supply and weaker Far East demand (1998)
- Natural disasters such as Hurricane Katrina (2005)
- Geopolitical tensions and a weak dollar (2007/8 and 2013/4)
The UK gas and electricity wholesale market is in a precarious position as supply and demand are mostly equal. Any sudden change in demand could lead to supply shortages. Investments in infrastructure are paving the way for less reliance on imported fuel, but this will take many years to come online.Start your quote >