Wrong energy tariffs cost West Midland SMEs £500m a year

SMEs in the Midlands are over-paying for their energy by up to £500m a year, according to new data.

Saturn Energy said 70% of SMEs were paying through the nose because they did not keep track of basic information such as their contract renewal date or even who their supplier is.

The company provides analysis on the energy markets to more than 1,000 businesses in the region with a total annual energy demand of 163million kWh. These include 400 firms in Birmingham, 84 in Wolverhampton, 146 in Coventry, 83 in Dudley and 72 in Walsall.

Clients include manufacturing companies, retailers, hospitals and the public sector.

John McShane, managing director, said that in many cases contracts were rolled over from a discounted rate onto standard rates of up to 35% higher or even ‘out of contract’ rates, which can be up to 200% higher.

“Many SMEs have been hit with increases in production costs, VAT and fuel at a time when the economy is really struggling to recover,” he said.

“The fact that 70% of those businesses could be paying too much for their gas and electricity, simply because they don’t keep a track on basic information, is frightening.”

The company’s research is based on 10,000 calls a year to businesses in the SME sector across the region.

The figure of £500m is based on a 35% increase in charges on a moderate annual energy bill of £2,000, across 70% of SMEs. However, the firm said this was a conservative estimate and the true figure could potentially be even higher.

“Even a small business, such as a newsagents or a corner shop, can spend £1,500-£2,000 a year on energy, so a 35 per cent increase in costs can have a major impact on their profitability, ultimately threatening jobs and even risking the closure of the business.
 
“It’s the business equivalent of not seeking out the best car insurance or forgetting who your home and contents insurance is with but it can have a big effect on the profitability of a business,” added Mr McShane.