If I asked many smaller retailers and suppliers what their energy bills were on average every month, the chances are they would reply: “I have no idea.”
Most small businesses can tell you how much the lease costs for the shop or store they operate from, and how much they spend on employees’ salaries.
When it comes to energy, however, many do not have the accurate information they need to understand exactly how much it is costing them to keep the lights on and stay trading, despite the fact that energy bills form such a significant chunk of the average small company’s total expenses.
Indeed, for small retailers and suppliers, the cost of energy is one of the biggest concerns when operating a business, with Citizens Advice reporting just last year that nearly half (46%) of small business owners cited mains electricity as their most significant worry.
The ACS also recognises the impact of energy costs, stating “the nature of convenience retail, with long operating hours, intrinsic use of refrigeration and other equipment, means energy costs are a significant burden”.
But while energy costs are seen as an issue, engagement among small businesses remains low. The Competition & Markets Authority’s investigation into the energy industry, published in July, found nearly half (45%) of microbusinesses were still on the default electricity tariff their provider had set them up on.
Energy bills are daunting for small businesses. Searching around for the best deal armed with estimated bills can prove complex and confusing. But fortunately there is now a significant development that means small businesses can finally take control of their energy use.
The government has said that energy suppliers must offer every small businesses (with fewer than 10 full-time employees) and households in Great Britain a smart meter by 2020. Smart meters will mean an end to this system of estimated billing, which is a symptom of an out-of-date energy network.
Instead of relying on estimates or manual meter readings, smart meters will communicate usage data to energy suppliers directly and digitally. This means the supplier will have more accurate information and therefore produce more accurate bills. There will no longer be any need to worry about meter readings (which will be consigned to history) and no need to worry about paying too much.
The result for small businesses will be less confusion and fewer disputes when the bill comes through the letterbox. And just as importantly it will mean energy users gaining control over what is a significant expense for the average business.
The government currently estimates the overall benefits small businesses can expect to realise as a result of smart meters are about £1.44bn. It’s our job to make sure small businesses throughout the country are fully aware of how this simple step towards greater energy efficiency will mean fewer headaches and a positive impact on business.
Sacha Deshmukh is CEO of Smart Energy GB, an organisation set up by the government to communicate about smart meters