There was no problem with the supplier and no dispute over the bills. The business simply wanted an independent view of its contract before committing to the next one.
At a Glance
Energy can represent a significant operating cost for manufacturing businesses. Machinery, production equipment, lighting, heating, ventilation and other electrical systems all contribute to substantial electricity and gas consumption throughout the year.
And when consumption is high, even a relatively small difference in energy rates can have a noticeable effect on annual expenditure.
In this example, a manufacturing business in Lancashire wanted to understand whether its existing energy contract still represented good value. The business wasn't experiencing a problem with its supplier — the supply was working normally and the bills were being paid. But the arrangement hadn't been independently reviewed for some time.
Could the business be paying more for its energy than necessary?
Rather than making assumptions, we reviewed the account properly.
The company operated from commercial premises in Lancashire and used considerably more energy than a typical small office or retail business. Energy was required throughout the working day for a combination of production equipment, machinery, lighting and general building operations.
Because consumption was relatively high, the management team naturally monitored overall energy expenditure.
There's an important difference between knowing how much you're spending and knowing whether the contract behind that expenditure remains competitive.
The business had continued with its existing arrangement because everything appeared to be working as expected. There was no obvious reason to question it. But as the next contract decision approached, the company wanted an independent view before committing itself.
Rather than simply looking for a cheaper headline price, the review considered the overall energy arrangement.
Business energy is charged by the kilowatt-hour alongside other applicable costs — wholesale, network, taxes and levies, plus a standing charge depending on the contract. For a higher-consumption business, a difference that barely registers for a small company becomes significant across a manufacturer's annual usage.
The cheapest-looking unit rate doesn't necessarily mean the lowest overall cost. That's why I prefer looking at the complete contract rather than comparing one figure in isolation.
Historic consumption was reviewed to understand how much electricity and gas the company actually used, giving a realistic basis for comparison. The objective wasn't to find the cheapest advertised rate — it was to understand what each suitable option would actually mean for this business over a year.
Ofgem states that business energy contracts can run for up to five years, and most suppliers won't allow a switch before the end of the term. A contract that ends without a replacement can move onto deemed, out-of-contract or rollover arrangements — so knowing the dates gave the company time to consider its options.
Source: Ofgem guidance on business energy contracts.
After reviewing the account, the analysis indicated that the company's existing pricing was no longer as competitive as some of the alternative arrangements available for its consumption profile.
Again, this didn't mean the supplier had done anything wrong. The existing contract may have been perfectly reasonable when it was originally agreed.
But markets change. Business requirements change. Consumption can change. And different contract options become available.
The important question was whether the arrangement still made sense today. The review suggested there was an opportunity to improve the company's energy costs when its next arrangement was put in place.
in potential annual savings, based on this company's consumption and the alternative used in this example
For a manufacturing business, that's money that could potentially remain within the company and be used elsewhere. But there's an important point here.
£6,800 isn't a figure every manufacturing business should expect to save. Some businesses could identify a larger opportunity. Others a much smaller one. And some may already have a competitive contract with little or no worthwhile saving available. Every review needs to be based on the individual business.
Imagine two businesses comparing energy arrangements.
A small office or shop
A small difference in the price paid per unit has a limited impact across the year.Machinery running through the working week
That same difference is multiplied across much greater consumption — and becomes material.That's why I wouldn't judge a commercial energy contract purely by whether the monthly direct debit “looks reasonable”. The underlying rates and consumption matter.
An energy review doesn't mean you have to change supplier.
The purpose is to establish what options are available and whether the existing arrangement remains competitive.
If that's what the figures show, that's what I'll tell the business. The goal isn't to generate a switch — it's to help the business make an informed decision.
Leaving an energy review until the existing agreement has already ended reduces the time available to understand the options properly.
Ofgem distinguishes between several types of business energy arrangement, including fixed-rate, variable, deemed, out-of-contract and rollover or evergreen contracts. A fixed-rate contract generally fixes the price paid per unit for the term, although the total bill still depends on how much energy the business uses and the particular contract terms.
That's why knowing the contract end date matters. It gives a business time to:
For a manufacturing company with significant annual consumption, that preparation is particularly worthwhile.
Source: Ofgem guidance on business energy contract types.
The lesson from this example isn't “manufacturers can save £6,800 on their energy.” That would be far too broad.
The more energy your business consumes, the more important it is to understand exactly what you're paying for it.
If you operate a manufacturing, engineering, industrial or production business, it's worth knowing:
These are relatively simple questions. But for a high-consumption business, the answers can have a meaningful financial impact.
This is one of the most important messages on my website. A review doesn't need to find a saving to be worthwhile.
Suppose I reviewed another manufacturer's energy arrangements and found the rates were competitive, with no alternative attractive enough to justify changing anything. My recommendation would be:
Stay where you are.
I wouldn't recommend changing something simply so I could say I'd found an alternative. The company would still benefit from the review, because management would now have independent reassurance that the existing arrangement appears competitive.
Sometimes identifying a saving is the right outcome. Sometimes confirming that no action is necessary is the right outcome. Both are useful.
If you operate a manufacturing, engineering or industrial business and haven't reviewed your energy arrangements recently, send me a recent electricity or gas bill. I'll look at the contract, rates and consumption and explain whether there appear to be opportunities worth considering.
Free. No upfront fees. No obligation to switch. UK businesses.
The figures in this case study are based on an example review and are illustrative. Savings identified are potential savings, not guaranteed savings, and will vary depending on a business's existing contract, unit rates, standing charges, consumption, contract timing and the options available at the time of review.
