Bad energy broker service: why charities are wasting their hard-earned funding on energy costs
There are more than a few ways for charities to keep their energy costs down. Why are so many missing out?
There are two obvious ways for registered charities to keep their energy costs low:
- VAT reductions
- CCL exemptions
What do we mean by this? It’s pretty simple.
If you’re running a charity and you’re paying 20% VAT on your energy bills, you’re paying about 15% too much.
You should be paying 5%.
Best of all, you can reclaim VAT overpayments from your current and your previous energy suppliers. So not only will you save, you’ll also get money back, too.
When it comes to the Climate Change Levy (CCL), things get even more interesting: charities don’t have to pay this charge on their energy bills at all.
Removing it from your bills reduces your costs by 5%.
And rebates for overpayment can be claimed as far back as 2009.
What would these savings and rebates mean for your charity? It depends on how big your energy bills are – after all, we’re talking about percentages, not fixed numbers.
But we’d put money on your charity being able to do a lot of good with that money. It might mean an extra member of staff, or additional projects, or more research.
Whatever it is, that money is better off in your bank account than your energy supplier’s account.
Unfortunately, most of the charities we work with don’t know these savings are possible.
Here are a few reasons why:
1. Charities know a lot about what they do, but they don’t know a lot about the energy market
This isn’t a criticism. Not many organisations have real energy management expertise on staff. In fact, only really big businesses and sometimes government and local government departments tend to have that kind of knowledge and experience in-house.
The biggest businesses have the kind of expertise and experience that allows them to buy their energy directly from their suppliers or even directly from the wholesale energy market.
2. Bad energy broker service
Lack of expertise in energy means that many charities are dependent on experts for advice… and that usually means they use an energy broker.
The problem is, a lot of energy brokers simply can’t be trusted. And a lot of them aren’t experts in charities and their specific needs, so they won’t be able to advise you on things like VAT reduction and CCL exemption.
On top of that, energy brokers often charge very high fees for their service, which pushes up the cost of your energy.
And they don’t lower their fees for charities.
3. Energy brokers aren’t regulated
At the moment, business energy brokers aren’t regulated at all, unlike the consumer market. They don’t need a license to operate, they don’t need to register with Ofgem, and they don’t need to comply with any code of practice.
And there certainly isn’t any industry-standard training programme or college course they have to take.
Anybody can set up as an energy broker.
This lack of regulation means that energy brokers are free to add their fees to your unit rate (anywhere from 8-40% extra), and they don’t have to tell you about it or justify it.
And that means you’re paying your energy broker’s sales commission every time you turn on the lights in your building.
Bad energy broker service is costing charities money
Troo works with a number of charities and we’re building up a pretty good picture of what’s happening out there.
For instance, we recently saved one of our charity customers a whopping £18,000 at a time when energy prices were rising. We could do it because a) we’re not an energy broker, so our fees are much lower and we’re always transparent (brokers will never tell you their fees), and b) we switched them to the cheapest energy suppliers we could find.
Because that’s the other problem with energy brokers: they all have their preferred suppliers, and they’ll place contracts with those suppliers whether it’s the best option for the customer or not.
We don’t think that’s fair.
So it’s not how we operate.
Business energy regulation is on the way, and that’s why troo is here watching our customers’ backs. Our customer should never have been paying that much for their energy.
That’s the real cost of bad energy broker service for charities.
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