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Contracts during the pandemic

SK Energy

1st May 2020

Economic Advice & Solutions

SK Energy

By Reemesh Patel

SK Energy

WHAT a strange and surreal time every single one us are experiencing right now. Coronavirus has impacted each of us in some shape or form.

The Government's response to provide an initial £330bn package to support businesses through the evolving situation is unprecedented and welcomed. Businesses of all sizes and sectors across the UK are facing short, medium and long-term pressures and the measures outlined by the Rishi Sunak were both bold and necessary. However, businesses are experiencing challenges right now and it is absolutely critical that the roll out of these measures is conducted efficiently and without delay to ensure that both employers and employees can be reassured. It will also become clear whether these measures are sufficient to provide essential aid to businesses at this critical time.

I have seen many businesses rally together on social platforms to share knowledge, provide moral support and help each other. I would continue to urge all businesses to stay abreast of the developing situation and refer to the steady flow of information and support available from Government and relevant bodies. Equally, I would recommend the business community to reach out to the Northamptonshire Chamber of Commerce or review the Wilson Browne Solicitors Coronavirus Advice Hub, which is packed with up to date and relevant advice.

So back to our field of expertise and business utilities. There has been some significant movement in the gas market, mainly driven by a massive reduction in demand across the world. Russia and Saudi Arabia are unable to reach an agreement on oil production levels which sent the price of oil tumbling, along with the bloodbath on the financial markets. So, while headlines are focused on the pandemic at hand, if you have an exposure to gas in your portfolio, now would be a good time to explore pricing opportunities to take advantage of the low wholesale price of gas. Unfortunately, the electricity market is not proving to be as favourable at present but we would still recommend looking at these sooner rather than later.

In these uncertain times, businesses need to think about cutting costs and making sure you are not paying too much on your energy bills. SK Energy can offer no standing charge business tariffs, which means if your business is not using gas or electricity you won't spend anything. By the same token if you're a business that is temporarily closed, especially in the retail, leisure and hospitality sectors we recommend that you switch off any non-essential equipment and provide regular meter readings to your suppliers.

Remember, you are not alone and if you are facing financial difficulties in paying your utility bills please contact one of our dedicated team. Most suppliers have provisions in place to help. The coronavirus will not impact security of supply, so there is very little risk of the lights or heating going off, but we appreciate some businesses will be concerned about the financial implications of paying energy bills when they cannot operate 'as usual' themselves.

Suppliers are responding to government advice in the same way as other businesses. They are trying to provide the expected service levels when it comes to competing in tenders to secure contracts, answer queries and complaints, and produce accurate bills.

Our advice to any businesses that are concerned about the impacts of COVID-19 on their energy bills and contracts is as follows:

* Take regular meter readings (weekly if possible) to accurately track your consumption. Ideally take a photograph with the serial number clearly showing. Without meter readings you will not receive accurate bills. You may end up paying more than you need as suppliers won't take into account that your business might be running at reduced capacity. Meter readings are not required if you have half hourly electricity meters, daily read gas meters or functioning Smart/AMR meters

* Continue paying your energy bills in their entirety as missed payments will affect your credit score

* Ensure you don't allow your contract end date to pass without negotiating a new term. Very high out of contract rates will be billed until a new contract term is agreed. Some suppliers have already indicated they will only offer renewal contracts for the foreseeable future, so your options may be limited.

* Don't be scared or rushed into accepting a contract over the phone, either with the supplier directly or through a broker. Wholesale prices are at a historic low level, but this has been the case for several months. There is no need to rush into a commercial decision, especially not for a long duration. There are significant other market developments, including the Targeted Charging Review, which will have a greater impact on your future bills than coronavirus.

* Communication with the energy supplier is always encouraged when you are aware there will be issues. It may be that your consumption levels for a time will be substantially reduced or zero. The supplier could factor this in as it is also in their best interests to bill accurate energy use. If you believe you will have difficulty paying invoices, talk to the supplier and see what they can do. SK Energy is here to help

We continue to discuss with energy suppliers their approach to coronavirus and will communicate to our clients and wider audience as appropriate.

Stay safe everyone.