FSB Voice of Small Business Survey Panel April/May 2014 Energy Survey. Prepared by Research by Design
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1 FSB Voice of Small Business Survey Panel April/May 2014 Energy Survey Prepared by Research by Design
2 Methodology Research findings are based on a survey made available to the FSB Voice of Small Business Panel during April May ,984 panel members were invited to take part in the survey designed and hosted by Research by Design. Fieldwork took place between Wednesday 30 th April and Wednesday 7 th May ,434 responses were received; an 18% response rate.
3 Energy Suppliers
4 Q1. Which of the following best describes how your business's energy is managed? Base: 1,433 How businesses energy is managed Business energy is managed separately to domestic energy 56% Business energy is incorporated in domestic energy supply 33% Business energy is included in our rental costs 10% Survey closed We generate all of our own business energy (gas and electric) 1% Just over half of FSB members manage their business and domestic energy separately. A third state their business energy is incorporated in domestic energy supply, whilst a further 10% have energy costs included in their rent.
5 Q2. From which of the following suppliers do you purchase (a) gas and (b) electricity for your business? Base: (all indicating a supplier) Purchasing gas and electricity for business Gas Electricity Opus energy Haven Power 24% 25% 21% 22% 19% 14% 15% 14% 10% 8% 7% 5% 5% 4% 4% 4% 4% 3% 2% 2% 0% 0% British Gas EON npower Scottish Power SSE (formerly Scottish and Southern Energy) Utility Warehouse From a third party or energy broker EDF Power NI Other supplier This energy type is not supplied to our business premises Members purchase their gas and electricity from a range of suppliers with British Gas and EON being the most popular. Around a quarter of those replying do not have a gas supply.
6 Q3. Why did you choose to use a third party or broker? Base: 36 (Low base size - Those who manage business energy separately to domestic energy and use a broker) Reasons for choosing a third party or broker 60% 14% 9% 10% 5% 3% 5% To get the best tariff Lack of time to find best tariff Recommendation from Lack of information on Do not understand a peer/ professional tariffs how to compare tariffs Other Unsure The majority use a third party or broker to get the best tariff when purchasing energy for their business.
7 Q4. What type of third party or broker have you used most recently? Base: 36 (Low base size - Those who manage business energy separately to domestic energy and use a broker) Type of third party or broker most recently used An independent broker or consultant 55% An agent working on behalf of an energy company 18% An independent energy advice company 16% Other 3% Unsure 7% Around half of those using a third party or broker have recently used an independent broker or consultant. Recently, less than a fifth have used an agent working on behalf of an energy company or an independent energy advice company.
8 Q5. How likely are you to recommend using a third party or broker to other small businesses? Base: 35 (Low base size - Those who manage business energy separately to domestic energy and use a broker) Likelihood to recommend using a third party or broker 21% Very likely 40% Fairly likely 8% Not very likely Not at all likely 31% Most members who use a third party would advocate using one.
9 Energy tariffs
10 Q6. Approximately, how much do you spend per year on energy? Base: 802 (Those who manage business energy separately to domestic energy) Spend on energy per year Less than 500 6% 500 to % 1,000 to 1,999 24% 2,000 to 2,999 13% 3,000 to 3,999 8% 4,000 to 4,999 7% 5,000 to 9,999 13% 10,000 or more 14% Unsure 1% Over half spend less than 3,000 on energy per year with a quarter of members spending between 1,000 and 1,999. On average, members spend 4,243 a year on energy.
11 Q7. To what extent do you agree or disagree with the following statements regarding your business energy? Base: 747 to 791 (Those who manage business energy separately to domestic energy) Base I find it difficult to compare the tariffs of different energy suppliers 47% 23% 12% 8% 8% 781 Switching energy suppliers is challenging 42% 23% 15% 9% 7% 3% 777 My energy suppliers bills and associated tariffs are difficult to understand 28% 30% 20% 9% 10% 791 I am aware of the different tariff options available from my energy supplier(s) 17% 27% 18% 14% 20% 4% 747 My current energy supplier(s) offers help and advice on improving energy efficiency 5% 14% 26% 17% 27% 11% 789 Strongly agree Slightly agree Neither agree or disagree Slightly disagree Strongly disagree Unsure Members mostly agree they find it difficult to compare the tariffs of different energy suppliers and that switching is challenging. Around a fifth agree their current energy suppliers(s) offer help and advice on improving energy efficiency.
12 Q8. Businesses are currently required to negotiate their energy contracts on an individual basis, rather than being able to pick from a choice of published tariffs like domestic customers. Given this information how do you feel the introduction of published tariffs for businesses would affect your company? Base: 804 (Those who manage business energy separately to domestic energy) Affect of the introduction of published tariffs 2% 17% Strong positive impact Slight positive impact 49% No difference Slight negative impact 32% Strong negative impact Eight in ten FSB members state the introduction of published energy tariffs would have a positive impact on their business.
13 Q9. Why do you think published tariffs would have a positive impact on your business? Base: 649 (Those who manage business energy separately to domestic energy and state positive impact) Reasons for published tariff having a positive impact 77% 60% 38% 32% 1% Makes it easier to compare tariffs Would make prices more competitive Makes it easier to switch suppliers Remove the need to use a third party or broker Other Of those FSB members stating published tariffs would have a positive impact on their business, around three quarters state it would make it easier to compare tariffs. Six in ten believe prices would become more competitive.
14 Q10. Why do you think published tariffs would have a negative impact on your business? Base: 18 (Low base size - Those who manage business energy separately to domestic energy and state negative impact) Reasons for published tariff having a negative impact 67% 38% 33% 17% 12% 6% 6% Prevents you from negotiating the best price Hidden details may prevent me finding the best deal Would drive up prices Makes it more complicated to compare tariffs Makes it more difficult to switch suppliers Will still need to use a third party or broker Other For those who state published tariffs would have a negative impact on their business, the majority believe it would prevent them from negotiating the best price.
15 Switching providers
16 Q11. Which of the following best describes your experience or consideration of switching energy suppliers in the past year? Base: 803 (Those who manage business energy separately to domestic energy) Experience or consideration of switching energy suppliers I have switched suppliers 36% I am currently in the process of switching suppliers 6% I attempted to switch, but did not complete the process 8% I am actively considering switching suppliers 8% I have not switched suppliers 43% Half of members have either switched, are in the process of switching, or are considering switching energy supplier.
17 Q12. How easy or difficult was the switching process overall? Base: 285 (Those who manage business energy separately to domestic energy and have switched energy suppliers) Ease or difficulty of overall switching process 1% 13% 16% Very easy Fairly easy 23% Fairly difficult Very difficult Unsure 47% For those who have switched energy suppliers, around six in ten found the process easy; around a third found it difficult.
18 Q13. What has been the impact on your business as a result of switching energy suppliers? Base: 285 (Those who manage business energy separately to domestic energy and have switched energy suppliers) Impact on business as a result of switching energy suppliers Strong positive impact 11% Slight positive impact 50% No difference 23% Slight negative impact 8% Strong negative impact 1% Unsure 7% Switching energy suppliers has had a positive impact on business for over six in ten FSB members.
19 Q14. Which of the following difficulties have you encountered when switching suppliers, if any? Base: 159 (Those who manage business energy separately to domestic energy and switched with difficulty or did not complete switching process) Difficulties encountered when switching suppliers 63% 61% 42% 40% Negotiating new rates with competitors Too many questions asked Time consuming and disruptive 30% 20% 16% 5% 2% Notice periods for termination are not clearly stated/ divulged Contract terms and conditions are too complicated/ difficult to understand Overall the process was too slow Lack of information on what the process entailed Lack of clarity over which paperwork should be submitted Asked to provide copies of existing bills to a new supplier Required to pay money up front to a new supplier Other Unsure Notice periods not clearly stated or contract terms and conditions being too complicated/ difficult to understand are what makes the switching process difficult or prevents members from completing the switch.
20 Q15. Why have you not switched energy supplier? Base: 343 (Those who manage business energy separately to domestic energy and have not switched) Reasons for not switching energy suppliers Satisfied with current deal 35% Too much hassle 27% Lack of time to compare tariffs 26% Lack of information in order to make an informed decision 22% Deals available are too complex 12% Cost of switching is too high 2% Other 24% Tied into a fixed rate tariff Unsure 1% Satisfaction with current deal is a reason for a third not switching. Over one quarter of members state it is too much hassle or they have limited time to compare tariffs.
21 Q16. What are the most important factors when considering a new energy supplier? Base: 801 (Those who manage business energy separately to domestic energy) Important factors when considering a new energy supplier Price 92% Standard of customer service 44% Continuity of supply 31% Ability to monitor our energy usage Suppliers reputation Previous experience with the supplier 16% 14% 13% Recommendation from peers/professional advisors Avoiding the Big 6 energy Companies Availability of green/renewable supply/tariff Advice on energy efficiency 8% 8% 6% 5% Ability to sell the energy we generate Other Unsure 1% 1% 4% Price is the key driver when considering a new energy supplier. Customer service is important to around two fifths of FSB members.
22 Energy market
23 Q17. To what extent do you agree or disagree with the following statements regarding the energy market? Base: 747 to 772 (Those who manage business energy separately to domestic energy) Base There is enough competition in the energy market 10% 17% 20% 19% 31% 3% 772 Energy companies care about small businesses 2% 14% 20% 61% 747 Strongly agree Slightly agree Neither agree or disagree Slightly disagree Strongly disagree Unsure Around half do not agree there is enough competition in the energy market and most do not think energy companies care about small businesses.
24 Q18. Which of the following energy efficiency improvement measures do you (a) currently have in place or (b) plan to implement (or improve) in the next 12 months? Base: (Those who manage business energy separately to domestic energy) Energy efficiency measures 'Switch off' policy, turning electrical devices off when not in use 19% 72% More energy efficient products or machinerys 42% 57% Staff training to encourage greater energy efficiency 28% 38% Improved insulation 25% 33% Currently in place Monitored energy use 20% 37% Plan to implement in next 12 months New technology (combined heat and power) 3% 14% Other 3% 4% Not taken/ will not take any measures to improve energy efficiency 13% 18% The majority of members currently have a switch off policy in place to conserve energy. Members are considering energy efficient products, monitoring usage and improving insulation in the next 12 months.
25 Q19. Do you know what you pay per unit (kwh) for your gas and electric? If you are unsure you will find this on a recent bill from your supplier. Base: 579 (Those who manage business energy separately to domestic energy) Energy pricing 51% 49% Yes No Only half of members are aware of how much they pay per unit (kwh) for their gas or electric.
26 Q20. What is the cost per unit of energy for your business? Electricity Base: 246 Q21. What is the cost per unit of energy for your business? Gas Base: 79 (Those who manage business energy separately to domestic energy and know what they pay per unit) Cost per unit of energy for gas and electricity Gas Electricity Less than 3.00p 9% Less than 10.00p 14% 10.00p to 11.00p 24% 3.01p to 3.50p 18% 11.01p to 12.00p 25% 3.51p to 4.00p 27% 12.01p to 13.00p 14% 4.01p to 5.00p 33% 13.01p to 14.00p 9% to 15.00p 5% More than 5.00p 13% More than 15.00p 9% The majority of members pay between 3.51p and 4.5p per kwh of gas and 10p to 12p per kwh of electricity.
27 Q20. What is the cost per unit of energy for your business? Electricity Base: 246 Q21. What is the cost per unit of energy for your business? Gas Base: 79 (Those who manage business energy separately to domestic energy and know what they pay per unit) Average cost per unit of energy for gas and electricity Gas Electricity Average cost: 4.09p Average cost: 11.94p The average cost per unit of energy for businesses is 4 pence for gas and 12 pence for electricity.
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