At the time of writing, drought-like conditions are affecting Europe, causing forest fires and water shortages. But soon the rain will come, the nights will arrive much earlier in the day, and we will begin the steady march towards winter.
As the colder months set in, energy bills will be sky high.
Driven by high demand and low supply throughout 2020 and 2021, gas prices and electricity costs were already worrying consumers when Putin decided to send his armies into Ukraine in February 2022.
In the first two weeks of the Russian invasion, oil, coal and gas prices rose by 40%, 130% and 180% respectively. Although these prices have fallen again, it will take some time for prices to return to pre-conflict levels. After all, Russia controlled much of the flow of natural gas to Europe, and with high uncertainty comes high prices.
Consumers therefore have one eye on the gas meter and the other on their expenses as the cost-of-living crisis sets in. They will feel the pinch. That is certain. But their collective voice is putting pressure on governments to take action; countries such as the UK, Germany, Italy, France and Spain have implemented a windfall tax on energy companies. A portion of this tax will be given to consumers in difficulty.
Furthermore, in the UK, consumers are protected – to some extent – by an energy price cap that was introduced in 2019. The energy price cap sets the maximum amount that can be charged to customers on top of a variable dual fuel rate for typical gas and electricity usage over six months.
In short, there is help for consumers.
For businesses, however, facing long nights that can be dark and full of terrors, there is very little support.
Instead, they face:
- High inflation
- Supply chain disruption
- Labour shortages
- Pressure to act on climate change
- All of this on top of high energy bills. Bills that will easily eat into their already reduced profits in many cases.
So what can businesses do?
Governments recommend that businesses invest in efficiency by replacing traditional lighting with LED bulbs, installing motion sensor technology to reduce waste, putting solar panels on roofs, and insulating premises. All excellent and valid initiatives.
But they should also turn their attention to negotiating and renegotiating contracts with suppliers to get the best deals possible. They will not see prices similar to those of 2018, but their efforts can reduce the impact of current increases.
As an additional step, they should look at other areas of their expenditure. Perhaps by making significant savings in printing, telecommunications, waste disposal or IT, they can at least partially offset the high bills.
"I don't have time to negotiate contracts or implement energy-saving projects."
Most companies don't.
It's one of the top three reasons why many companies hire ERA Group's services.
We can shed light on opportunities while you focus on running your business.
If you're curious, the other two reasons are:
- A "No savings, no fee" policy.
- 30 years of experience and expertise.
You are right to be concerned about the looming energy crisis. But with our help, you can weather the coming harsh winter and emerge from 2022 in a stronger position than you found yourself in.
