The hardest-hit industries from Covid may find it even harder to get energy contracts in the post-Covid world, including retail, leisure centres, gyms, hotels, cinemas, restaurants and theatres.
As the third national lockdown gradually eases, more and more businesses will (hopefully) be ramping up their operations and reopening offices, shops or other facilities that may have lain dormant for months.
This presents a wide range of challenges, from ensuring workspaces are set up to meet social distancing guidelines to demonstrating to visitors that leisure facilities are safe.
But another factor that will have to be considered is how you secure a strong energy supply in the new, post-Covid world. For many firms, the difficulties thrust upon them by lockdown, such as the need to furlough staff or even shut down locations completely, could have a major impact on their energy situation.
This may not be an area that firms have been overly engaged with over recent months as survival is a top priority. However, as lockdowns ease and the country opens up again, it could result in a few unpleasant surprises for some firms as they try to get back to business as usual.
Be aware of under usage contract penalties
A key factor for many businesses may be the prospect of extra charges they may have racked up while locations are sitting idle. For many businesses, energy contracts require firms to commit to using a minimum amount of electricity in a given period, based on their expected usage. For example, if a firm typically uses 1,000,000 kWh of energy over a given period, their energy contract will often require them to consume at least 80% of this (800,000 kWh) or face penalties.
However, if business premises have been forced to close for several months, these baseline usage requirements will not have been met. This can leave firms exposed to the potential for large penalty charges from their energy suppliers, which could run into thousands or even tens of thousands of pounds.
In many cases, businesses may not even realise they are liable for these costs. After all, when organisations are signing contracts, they may often consider such clauses a minor detail, as, under normal operations, they would have no trouble meeting them. But with the unexpected shutdowns caused by the pandemic, firms have found themselves unable to meet their obligations through no fault of their own.
It should be noted that the consequences of this can vary widely depending on your energy supplier. While many suppliers are waiving such charges due to the exceptional circumstances, others are not, and those that are charging may be doing so in a range of different ways.
While some are being quite upfront and speaking to customers proactively before raising charges, others are not. This can leave customers being hit with these surprise charges within their normal invoice – which not every firm pays close attention to.
For example, one of Pulse Business Energy’s customers, received an £85,000 penalty under this clause. Fortunately, in this case, the supplier contacted us early, and we were able to speak to them and come to an agreement to withdraw the charge. However, many other firms will not be so lucky.
The challenges of finding new energy deals
Another potential issue for businesses coming out of lockdown is that many energy suppliers have been reviewing the offers they have available for business customers. Several suppliers’ credit teams have been reassessing the viability of their customer base.
Given that companies in certain sectors are particularly exposed to the financial impacts of the lockdown, these suppliers have been reviewing what the additional risks posed by these customers are and whether these customers may go out of business whilst still owing money for unpaid energy bills.
As a result, many credit terms have been tightened, which means it may be difficult for businesses to obtain credit lines in the same way they would have previously.
Many businesses are being looked on less favourably by suppliers, which means when they are searching for business energy deals, they may be asked to pay large security deposits before being offered a contract. Some suppliers have even withdrawn contract offers for these firms completely. This may leave businesses with less choice and therefore, the potential of facing higher charges.
Those that may find it harder to get good deals in the post-Covid world include retail, leisure centres, gyms, hotels, cinemas, restaurants and theatres. Historically, most of these sectors have had little difficulty obtaining credit, but they are now often being asked for large upfront deposits.
Next steps for concerned businesses
If you’re concerned about these issues, it pays to speak to a specialist adviser with experience in these matters. Pulse Business Energy can help guide you through the process of finding the best deal, even if you operate in a sector that’s been particularly affected by the Covid-19 lockdowns.
We’ve been keeping a close eye on the evolving situation in the energy sector and can offer expert, impartial advice about how to navigate your energy requirements as the country opens up again.
If you’ve been hit with unexpected charges, or you are finding it hard to secure an affordable energy contract, we can take you through the next steps.