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CHANGING your electricity supplier is likely to reduce your electric bill by 15%, initially. However, poor service, lack of advice and being tied into an uncompetitive contract are some of the pitfalls to watch out for.
Full deregulation of the electricity supply industry last year means all domestic and business customers can buy electricity from any company they choose, regardless of geographical location, says Farm Energy Centre adviser Andrew Kneeshaw.
"The way electricity regulations are set up means that most producers opting to change supplier will secure a saving of up to 15%. Sticking with the same supplier is the most unfavourable option, based on price."
Quotation from alternative suppliers is based on customers supply numbers, he explains. "The S number appearing at the bottom of your electricity bill is the supply number. This gives potential suppliers information on your electricity use pattern, enabling them to quote a price."
Before approaching companies for a quote, Mr Kneeshaw advises checking that you are currently on the most cost effective tariff structure. "There are potentially more savings to be made from changing tariff structure than moving to a new supplier.
"Also, your supply number will reflect your current tariff structure. This means that any quotes provided by alternative suppliers will be based on that, even when it is not the most cost effective for your business."
The Farm Energy Centre advises producers to check they are using an Economy 7 tariff. This allows early morning milking and a high proportion of milk cooling and water heating to use electricity which is a third of the standard price.
Once tariffs are established, there are several other questions that should be asked of potential suppliers, says Mr Kneeshaw. "The biggest problem with switching company is the inability of some to handle the transition smoothly.
"In some cases, new customers sign up and dont receive a bill for six to nine months. This may sound attractive in the short term, but when the bill does arrive it is high and may lead to cash flow problems. Ask suppliers when you can expect to receive a bill."
Meter reading arrangements can also lead to hiccups. "The meter reader for your local company usually knows where to find meters. There may be mix ups when meter reading is contracted to different people, especially when a farm has several supplies with different meter numbers."
But lack of back-up in the form of customer support and advice is one of the biggest problems, especially with the newer companies, according to Mr Kneeshaw.
"Before signing a contract, ask the company what support it will offer. For example will it be able to advise on the most economical milk cooling equipment for your unit."
"Some of the new companies treat electricity as a baseline commodity and dont have the infrastructure to provide good customer service." The traditional regional electricity companies are likely to offer superior service, he adds.
What the newer companies do offer are the largest headline savings. However, it is important to read contracts small print, he warns. "A company may be offering a 20% discount but may lock you into a contract for two to three years, by which time energy prices are likely to have fallen.
"Avoid signing contracts which lock you in for more than a year. Also where companies are offering a discount, ask what it is based on.
"One company recently offered a 20% discount based on a local companys 1998 prices. The local companys prices had fallen considerably since 1998 so the discount wasnt as attractive as it appeared."
Whatever the current discounts available, prices will converge over the next two to three years, predicts Mr Kneeshaw. "Prices may differ by 15-20% now, but in two or three years there may only be a 5-10% difference. Changing supplier is worth looking at, but ask yourself whether you want to go through that hoop." *
Check you are on Economy 7. This allows a high proportion of milk cooling to be done at a third of the standard price, says the FEC.