It’s not just about the price!

Business electricity and gas suppliers are offering moderate and medium sized business consumers a bad deal by hiding behind the contract small imprint. Price is the driving factor when negotiating a new business electricity or gas deal but don’t fall into the commodity trap as suppliers will catch you out. Business Electricity and Gas suppliers in the UK are hiding behind the supply agree small print to the detriment of their customers. Supply contracts for small and middling sized business electricity and gas customers are heavily weighted in favour of the supplier as many of the contract terms mystical in the small print are very ambiguous and will undoubtedly win the consumer out if they are not explained before they agree to the contract. Hidden in the small print is information about the cancellation clauses, price variability conditions, advanced termination timescales and how long the contract lasts for. These clauses are crucially important when a traffic customer takes out a contract or switches electricity or gas provider. One of the most important questions the customer needs to ask before they agree to the business energy contract is how long the price is fixed for and what type of contract is being offered? Most business electricity and gas supply contracts for small and medium sized business customers in the UK are “evergreen”, which means that the contract will continually recreate unless the customer serves conclusion a specified number of days before the fixed excellence term renewal date. This price term is a very important factor. What should happen is that the pursuit electricity or gas supplier should write out to the customer a certain period of time before the price deal expires and them a new deal for a future contract term. This sounds reasonable but the business energy recommencement notice in many instances is disguised to look like junk mail so that the client does not act on the information and just files it, only realising that their pursuit electricity or gas costs have significantly increased when they receive their next bill. They in turn call their business energy supplier who then informs them that their contract automatically renewed because they did not hear back from them in time. A number of customers are also reporting that they did not even receive the renewal price notice before their business electricity or gas contract was renewed, but most suppliers “deem accepting of the notice being received by the client on it being sent by the supplier”. When the customer queries this very onerous article the supplier usually presents a print out from their computer screen showing a date when the cognizance was sent by their mailing department. This does little to appease the client when they did not receive it, it begs the question why the business electricity or gas supplier does not contiguity the client to make sure they received their renewal notice safely. Although the contract price is the “carrot” when negotiating a new profession energy agreement please ask the company the following questions before agreeing to sign up:

1. How long is my business electricity or gas price fixed for?
2. What type of contract am I being offered, is it an evergreen contract that will assume renewal if I do not serve limit?
3. How many days termination notice do I have to give you before my fixed price expiry date?
4. What method do you use to offer me renewal prices prior to the end of my fixed price expiry date - post, email or telephone?
5. Can I cancel the contract mid term and how much will it cost?

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Technology which can help farmers cut climate change gases from their cows and create renewable energy should get more backing from the Government, farming leaders have urged. Cattle have come under fire for the methane, one of the major global warming gases, they create during digestion but some farmers are now attempting to turn their cows into part of the solution. Under a process known as anaerobic digestion, the animals’ manure, which contributes around 20% to 30% of methane emissions from cows, breaks down in the absence of oxygen to create a bio-gas. The bio-gas can be used to generate heat and electricity to be used on-site or for power to be fed into the grid, while the leftover odourless “digestate” can be used as fertiliser. The NFU is calling for the Government to create incentives for landowners to invest in the technology to bring the UK, which is lagging behind other countries such as Germany, up to speed in its use. Investment of some £143 million in 20 centralised anaerobic digestion plants which can also be run on food or other organic waste, could cut methane from manure by three-quarters, the NFU said. The union also wants to see on-farm bio-gas production receive Government support through education, financial support and incentives, cost-effective electricity grid connections and establishment of standards. NFU president Peter Kendall said anaerobic digestion was a “brilliant example” of how farmers could improve their environmental performance and should be incentivised. The proposals form part of the findings of the agriculture industry’s Climate Change Task Force which lays out a series of ways farmers and landowners can meet the challenge of global warming. Some individual farmers are already taking the lead, such as dairy farmer Owen Yeatman who has spent around £750,000 installing one of the anaerobic digestion units which he hopes will generate enough electricity to power 500 homes. The process, using manure from his 400-strong herd in Blandford, Dorset, along with crops, will also generate waste heat which can be used for drying grain and heating farm buildings.

Scottish & Southern Energy is said to be among the contenders to buy one of the world’s leading renewable energy firms. Airtricity, which is based in Ireland and is developing a portfolio of onshore and offshore wind farms, last month appointed advisers to work on the potential sale of the company. The process should be completed by the middle of next year. The business recently sold its US wind farms to German utility E.ON for £730m and could fetch the same again for its European assets, the Sunday Telegraph reported. A move by SSE would help spearhead its expansion a month after chief executive Ian Marchant recently set out plans to target the Irish market. Today’s report said SSE faced competition from several other European generators including Germany’s RWE, French group EDF and Iberdrola, the Spanish group behind the acquisition of Scottish Power earlier this year. Tough government renewable targets, together with difficulties in gaining planning permission for wind farms, should make Airtricity an attractive target. Airtricity was founded in 1999 and is both a generator and supplier of green electricity and currently supplies green electricity to more than 35,000 commercial customers in Ireland. The company is 51% owned by NTR, the former Irish national toll roads company, with the remainder in the hands of other investors. SSE, which operates as Southern Electric, Swalec and Scottish Hydro Electric, has 8.3 million energy supply customers. It also owns just over 10,000 MW of generating capacity, including 1,500 MW generated from renewable sources such as hydro-electricity plants and wind turbines.

If you want to compare all the UK electricity providers fuel mixes, particularly  the percentage of renewables they each use:

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Confused.com has become Energywatch’s 13th accredited energy price comparison website. Energy consumer advocate organisation Energywatch has recently named Confused.com as its 13th accredited energy price comparison website. Price comparison sites are popular with consumers, but the proliferation and varying standards of these sites should make suppliers wary of whom they align with. Many customers use price comparison websites, not only for electricity or gas, but also to compare financial products, travel, and other goods and services. These sites provide a great opportunity for customers to compare different propositions from different companies based on criteria provided by the customer. However in many cases, customers fail to realise that these websites normally charge suppliers to be shown on their site, and as a result, customers are likely to be choosing from a segment of offers in the market not all available offers. The number of price comparison sites available and the lack of consistency between sites will most likely add to the confusion of customers. In addition, suppliers that are not clients of sites are less likely to be informing them of new prices when changes occur, and will usually leave it to the site administrators to update prices where incorrect information can mislead customers. Indeed, the large increase in uptake of ‘online only’ tariff options by customers could be attributed to the increased use of price comparison sites. Ofgem figures show that between 2006 and 2007 there was a 100% plus increase in accounts that were signed up online. One advantage for suppliers is that often the price comparison sites will collect all the required information and then pass it through for the supplier to activate the switching process, saving call center and back office costs. Recently, price comparison sites have attempted to differentiate themselves by introducing service and quality ratings on some sites, but these could be open to abuse. As these rankings are operated by the site administrators, their interests may be best served by promoting the suppliers that pay the highest fees. In addition, most service rankings could be disputed and suppliers could argue about their rankings. Ultimately, energy suppliers would want a consistent and robust pricing system across all of these price comparison websites, to ensure customers are not needlessly confused. However, for the time being, web portals can negotiate varying commission structures that suppliers may accept just to be able to win potential business.

British households should prepare for a rise in energy prices in the New Year because power companies on the Continent are hoarding gas. Consumer group Energywatch warns consumers will be hit despite there being plentiful reserves of gas that could be piped to the UK. It is not the first time that some of Europe’s energy giants have been accused of holding on to gas that could otherwise be exported to Britain for a profit. The concern about supply shortages comes despite the building of new infrastructure to increase import capacity. “The amount of gas available is greater than for many years, but there is market manipulation which is creating winter scarcity,” said Allan Asher, Energywatch chief executive. Last Monday, as cold weather hit Britain, the demand for gas from households and power generators rose to its highest since March 2006. Such was the strength of demand that importers like British Gas were paying suppliers 3p a therm more than was being paid on the Continent. But the key Interconnector pipeline supplying gas from Zeebrugge, Belgium, to Bacton, Norfolk, was operating at only 12 per cent capacity. “This [low capacity] would not happen if there was an open and transparent market throughout Europe,” Asher said. “But there isn’t, and as a result British consumers are about to be stuffed again.”

Telegraph

Contract Natural Gas, the UK’s largest independent supplier of natural gas for business, is marking more than a decade in business by re-launching as CNG. CNG has launched its new identity with sponsorship of Harrogate Town FC as well as announcing a new website. The firm is also planning a series of appointments over the next three months. CNG was set up by late entrepreneur Colin Gaines in 1994 and since then has built key relationships with major clients including Pizza Express and Ask restaurants. Managing director Jacqui Hall, formerly of British Gas, is currently leading the re-brand which is targeting commercial gas users, including more businesses in the catering and hospitality sectors. She said the Harrogate business’s goal was to be recognised as a leader in gas supply in these areas as well as the specialist site works market, providing supply to commercial and housing developments pre-completion.

The Conservative Party’s Bow Group today publishes a report into Labour’s commitment to eradicate fuel poverty. Here its author, Tony Lodge, argues that with increasing energy prices there is a danger that the problem could be worsened. AS the first frost of winter bites, more and more families will spend this Christmas struggling to pay fuel bills and consequently join the growing number of British households in fuel poverty. Against a background of rapidly rising energy prices, Gordon Brown should be praying Jack Frost doesn’t do his worst. The consequences of a cold winter for those on low incomes could highlight the worst social crisis to face Britain for decades. More and more British households are spending a higher percentage of their income on energy costs. The number of households categorised as being in fuel poverty is expected to have doubled in the last four years, up from two to four million households. During this period we have had to endure the human tragedy, and political scandal, of Britain having 25,000 excess winter pensioner deaths each year as over 22% of older people have gone without gas or electricity in order to make ends meet.

Fuel poverty is when 10% or more of household income is spent on fuel for the home. It is reckoned that half of people in fuel poverty are pensioners, which should make these alarming statistics more pressing for the Government.

The Government is officially committed to completely eradicating fuel poverty by 2018 but this is now regarded as unachievable as energy prices spiral upwards and the Government’s own mechanisms for combating fuel poverty such as the winter fuel payment have not been increased in line with prices. Labour’s own budget to tackle this blight looks set to remain static or even face cuts, against the advice of its own Fuel Poverty Advisory Group. The Citizens Advice Bureau has revealed that the number of people seeking help with overwhelming debt problems soared to a record high in 2006 and the number seeking help because they are seriously behind on gas and electricity payments rose by a third. Coupled with rising council tax, food bills and petrol and diesel costs the pressures on lower income families is reaching breaking point.

Since 2004 energy prices have spiked. Gas prices from the beginning of 2004 to the end of 2006 rose by 67%. This was coupled with a 41% increase in electricity prices in the same period. The average fuel bill has risen from £572 in 2003 to £924 today. After a small reduction earlier this year, gas prices are rising again and this will affect electricity prices as gas now generates 40% and rising of Britain’s electricity. The Government has released data which supports fears that consistently high energy prices will result in more and more households falling into fuel poverty in the future.

There are a number of reasons for higher prices. According to industry regulator Ofgem the two main reasons for the price of gas are high oil prices, which strongly influence the gas price, and declining UK gas supplies. Importantly, as gas is now the main fuel used to generate electricity in the UK there is a direct knock-on effect on electricity prices. The dash-for-gas policy pursued in the early 1990s has resulted in the UK becoming perilously overdependent on supplies of gas, the bulk of which is to be imported from Russia, Algeria and the Middle East. The Paris-based International Energy Agency has warned that Britain is becoming too dependent on gas to generate its electricity on grounds of cost and security of supply. This warning should be heeded and acted on without delay if we are to address rising bills, more fuel poverty and energy security. Fuel poverty and energy policy are intrinsically linked. A balanced energy policy which utilises different sources helps stabilise prices, especially if a large proportion of this generation can be indigenously sourced. After all, the fundamental purpose of any energy policy should be to ensure reliable and affordable energy for domestic and industrial customers. High bills not only place more families in fuel poverty, they also erode our economic competitiveness as industry costs rise as a consequence of higher overheads. There are many reports of energy intensive industries hurting on the back of spiralling energy costs. Another problem for Britain of more gas dependence is the lack of a free market in energy on the continent which results in gas supplies not responding to strong UK prices and demand. Indeed, there is no shortage of gas in Europe, largely supplied by Russia, but there is no connection between supply, demand and price. British attempts to resolve this in the EU have singularly failed. Pressure from German and French power companies to protect their monopolies appear to have prevented the EU taking action in Britain’s favour. Overdependence on this one fuel for electricity generation is hurting the poorest families in Britain and driving more and more into fuel poverty. Next month’s Energy Bill must embrace a more balanced energy mix which can help get prices down in the long term and better guarantee energy security. Nuclear, clean coal and renewables must be embraced in order to wean Britain away from dangerous overdependence on foreign gas. If not, then the Government’s dismal recent record on fuel poverty will be cruelly exposed in the harsh winters ahead as the catastrophic social and economic implications for Britain become clear.

Sabien has recently won a new order from O2 the mobile telecommunications company to install its M2G energy saving technology across all their corporate offices. The order is the result of an initial installation at two locations which demonstrated average energy savings of 27% and 16%, a total of 192 tonnes of carbon saved during that pilot period, and a positive return on investment at each site of under 14 months and 7 months respectively. Paul Eggleton, Energy Manager at O2, said: “We have been very impressed with the performance of the M2G units.  They have lived up to all expectations and because they are so easy to fit there was no interruption in service to the two trial buildings.   “We are now rolling out M2G to other corporate offices in our portfolio and look forward to seeing significantly reduced gas bills.  The payback period is very good and we would recommend these to anyone with gas consuming sites.” The M2G is an intelligent boiler load optimisation controller that improves the efficiency of each individual boiler. A unit which can be retro-fitted to each boiler monitors the temperature of the water in the flow and return every 10 seconds and the information is recorded with heat transfer rates at the first and second stage firings. When a loading demand is made the system automatically checks the latest data it has stored and decides whether it is more economical to retain first stage firing or to introduce a second stage firing. The result is a substantial fuel reduction during less demanding situations while ensuring maximum capacity during heavy load periods. Sabien has recently launched M3G which reduces electricity consumption in commercial air-conditioning units. Both M2G and M3G are proven to reduce carbon and energy consumption by up to 35% with typical pay back in under 2 years. With interest in ‘green issues’ being at an all time high for private and public organisations, the need to achieve both financial savings as well as an improved environmental profile is becoming increasingly important in the Boardrooms of UK PLC. Rising energy prices also create a more immediate imperative to reduce energy consumption and cut energy costs. The urgency to seek new solutions is most definitely a growing feature of the market and consequently companies are beginning to implement energy strategies to meet challenging energy reduction targets. A number of customers are already using Sabien’s technology including the Royal Bank of Scotland Group, Ford Motor Company, Bank of England, Institution of Mechanical Engineers, Investec Bank and an NHS Trust. The M2G is Carbon Trust approved and qualifies for the Enhanced Capital Allowance Scheme.

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Centrica, the owner of British Gas, gave the clearest signal yet that energy bills are on their way up again, after it gave warning of a difficult environment for energy suppliers. Rising wholesale gas prices have reduced margins in the company’s residential gas and electricity supply business in the second half, prompting British Gas, the UK’s biggest supplier, to increase its key tracker tariff last week. However, today’s statement makes clear that further price rises are likely to be necessary. “Looking forward, the high wholesale prices will, if sustained, create a more difficult environment for retail energy suppliers in the UK going into 2008. We will continue to monitor this with regard to future pricing policy,” Centrica said. Since February, annual forward gas prices for 2008 have risen 42 per cent from 33p a therm to 47p a therm about 10p more than industry forecasts, according to analysts. Spot prices have risen 55 per cent over the past year to about 42p a therm from 27p.

High wholesale gas prices are also taking their toll on Centrica’s business to business operation, which supplies industrial and commercial customers with energy. In the trading statement, Centrica says that has become loss-making in the final quarter of the year and is likely to become increasingly loss-making in 2008 at current forward gas prices. Centrica’s power generation division, which supplies only about 40 per cent of British Gas’s needs, is expected to break even in the second half due to lower spark spreads the difference between the cost of wholesale power and retail power and higher levels of plant outages. Wholesale gas prices have been driven higher by soaring oil costs, a colder start to the winter than last year and European players buying supplies in the more liberalised UK market. British Gas was one of the first firms to cut energy bills early in the year, a move which won it back 250,000 customers. It now serves, once again, more than 16 million customers. Despite the rising gas prices, Centrica’s overall pre-tax profits will be in line with market expectations of about £2 billion for 2007, the trading statement said. The UK’s major energy suppliers are all poised to follow British Gas’s lead. npower, the third biggest supplier, confirmed today that customers following its tracker plan will see increases of 17 per cent for gas and 13 per cent for electricity from January 1. npower’s increases will mean an average £87 more a year on gas bills and £44 more a year on electricity bills for tracker plan customers, the company said. Most of its customers will remain unaffected. The increases to the tracker rate are significant because they give an indication of how much standard tariffs are likely to rise by. Analysts said that it looked increasingly likely that standard tariffs would have to rise by 15 per cent, which would mean consumers having to find an extra £137 a year.