I Can’t Afford to Pay my Company’s Gas and Electricity Energy Bills

Can’t Afford to Pay my Company's Gas and Electricity Energy BillsIn today’s challenging economic climate, the burden of rising energy costs has become an increasingly pressing concern for individuals and businesses alike.

As the cost of gas and electricity continues to escalate in the United Kingdom, the financial strain on companies has reached unprecedented levels, leaving some struggling to meet their energy bills.

Faced with the daunting reality of soaring expenses, I find myself caught in the disheartening predicament of being unable to afford my company’s gas and electricity bills, jeopardising the smooth functioning of our operations and adding an additional layer of stress to an already arduous situation

How to deal with increased company gas and electricity utility bills

As the nation struggles to cope with the rising cost of living, rising energy costs are increasingly putting a strain on household budgets. The majority of households and businesses will likely see significant price increases for their gas and electricity usage in the upcoming months.

Businesses are excluded from this ceiling rate, however residential customers are somewhat protected by the price cap established by Ofgem, which limits the maximum energy supplier can charge based on ‘average’ use. Due to the freedom to set their own uncapped prices for gas and electricity usage as well as standing costs, energy providers are allowed to dictate how limited firms and businesses are treated.

Due to the expiration of many energy contracts, company owners all throughout the country are receiving renewal pricing that will result in percentage rises well into the three figures for many.

What are the disconnection rules for gas and electricity for businesses?

In the United Kingdom, there are specific regulations governing the disconnection of gas and electricity for businesses. The disconnection rules are designed to protect businesses and provide them with certain rights and safeguards.

Under UK regulations, gas and electricity suppliers must follow a strict procedure before disconnecting a business’s supply. This typically involves issuing a series of warning notices and providing ample opportunity for the business to resolve any outstanding issues. The exact number of notices and the timeframe involved may vary depending on the circumstances and the supplier’s policies.

Before disconnecting the gas or electricity supply, suppliers are required to issue a “Notice of Disconnection” to the business. This notice must clearly outline the reasons for disconnection, specify the outstanding amount owed, and provide a reasonable timeframe within which the business can take action. It is essential for businesses to carefully review the notice and respond promptly to avoid disconnection.

However, it’s important to note that disconnection should be the supplier’s last resort. UK regulations require suppliers to make every effort to help businesses resolve payment issues or seek alternative arrangements. This can include offering payment plans, directing businesses to relevant support schemes or debt advice services, and exploring options to ensure continued supply.

Overall, the disconnection rules in the UK aim to strike a balance between the supplier’s need to recover outstanding payments and the protection of businesses from abrupt and unjust disconnections. It’s crucial for businesses facing difficulties to engage with their energy supplier, seek assistance, and proactively address any outstanding payment issues to avoid the risk of disconnection.

Understanding business gas and electricity energy bills

Three components make up the majority of commercial energy bills:

  • You pay a standing charge every day regardless of how much energy you consume.
    Flow rate:
  • If your company uses a lot of energy, a low unit rate, measured in kilowatt-hours (kWh), would be preferred. Your current contract’s expiration date is here; if you break it before then, you might be charged.
  • A Climate Change Levy (CCL) that some businesses must pay for each unit of non-renewable energy they consume may also appear on your statement.

Understanding your business water bill

Whether you have metered or unmetered water will determine the components of your business water cost. Additionally, there is a sewerage fee. If your business has a water metre, the charge will be dependent on your water usage, which can provide you more control if your use isn’t excessive.

Similar to domestic water supplies, the payment for non-metered businesses is related to the property’s rateable value, thus you pay a set amount for this service regardless of the volume utilised.

What happens if I can’t pay my business gas and electricity bills?

The first thing you should check is the accuracy of the gas and electricity bill you have received; it should be based on actual metre readings rather than an estimate of how much energy was used. Don’t be afraid to dispute the amount if you think it is inaccurate by getting in touch with your supplier and asking how the bill was calculated.

In the event that your gas and electricity bill is accurate but you are unable to pay it, you may be able to work out a payment plan with your supplier to stretch the debt over a number of more manageable monthly payments in order to bring your account current.

If you can’t pay your energy bills, utility providers might be willing to work with you to arrange an installment plan. The utility supplier may agree to decreased payments for a predetermined amount of time if you already owe money for your gas and electricity but would want more time to pay, or if your cash flow has been temporarily hampered for a specific cause.

However, it’s crucial to contact them right away and explain your company’s financial status and the reason you are unable to pay your business’s energy bills. Being proactive and transparent in your messages demonstrates that you take customer payment seriously and that your company is actually having trouble. It will be beneficial for you to create a budget in advance so that you are aware of how much you will actually be able to spend.

Your gas, electricity, or water provider may disconnect you if you don’t make an effort to contact them; the costs associated with this and the subsequent reconnection will be added to your overall debt. If you don’t pay what’s due and don’t let your supplier know, your company’s gas and electricity energy supply could be cut off after just 30 days

How to lower your business energy bills

Lowering your business energy bills can help reduce costs and improve your bottom line. Here are 20 actionable tips to help you achieve energy efficiency and decrease expenses:

  1. Conduct an energy audit to identify areas of inefficiency.
  2. Install energy-efficient lighting, such as LED bulbs.
  3. Utilize natural lighting and adjust window coverings accordingly.
  4. Upgrade to energy-efficient appliances and equipment.
  5. Implement motion sensors or timers to control lighting and equipment usage.
  6. Install programmable thermostats to regulate heating and cooling.
  7. Ensure proper insulation in your premises to prevent energy loss.
  8. Regularly maintain and service HVAC systems to optimize efficiency.
  9. Encourage employees to power down equipment and turn off lights when not in use.
  10. Invest in energy-efficient computers and use power-saving settings.
  11. Consider renewable energy options like solar panels or wind turbines.
  12. Optimize ventilation systems to maximize airflow and reduce heating or cooling needs.
  13. Utilise power management tools to monitor and control energy consumption.
  14. Implement smart meters to track energy usage in real-time.
  15. Switch to energy-efficient office equipment, such as printers and copiers.
  16. Educate employees about energy-saving practices and encourage their involvement.
  17. Foster a culture of energy conservation by setting clear guidelines and goals.
  18. Negotiate energy contracts and explore competitive rates from suppliers.
  19. Take advantage of government incentives and grants for energy efficiency upgrades.
  20. Regularly review and compare energy tariffs to ensure you’re getting the best deal.

By implementing these strategies, you can significantly reduce your business energy bills and contribute to a more sustainable future.

Energy bills and company insolvency

While payment arrangements and energy conservation strategies might be able to protect your company from the biggest price hikes, for many these savings will be insignificant. Gas and energy prices for businesses have risen to such absurd proportions that many companies across the nation are unable to pay them.

The amount of these additional expenditures that can be taken on by the business and also passed on to customers is subject to a cap. Customers will only pay a certain amount for your product or service up to a certain point; after that, your business may swiftly cease to exist if immediate action is not made to restructure the company’s finances and operations.

Business rescue and restructure options when you can’t pay your energy bills

You should make it a priority to get specialised business rescue and recovery counsel from a licenced insolvency practitioner if you can’t pay your business’ gas and electricity bills because being unable to pay your payments as they become due is a major indicator of insolvency.

The good news is that a number of official restructuring procedures may be used to help your business get back on sound financial ground. A qualified insolvency practitioner will be able to evaluate your firm objectively and choose the best course of action based on its present financial situation and likelihood of future viability.

Company rescue options

You may be eligible to restructure debt under a formal insolvency procedure known as a Company Voluntary Arrangement (CVA) if your firm is successful but is now being hindered by these escalating gas and electrical energy prices.

Only certain businesses should use CVAs, but they do give sustainable businesses a chance to trade their way out of a financial jam. A CVA serves as an official payment arrangement made between a debtor corporation and its creditors. Your gas and electricity providers, as well as other commercial creditors, banks, landlords, and even HMRC, might be considered creditors.

The planned CVA will be overseen and nominated by a licensed insolvency practitioner (IP), who will also make a payment proposal on your behalf to your utility providers and any other creditors as needed in order to establish manageable payback plans for your debts.

When you are unable to pay your electricity or other bills, company administration is an alternative that you may want to consider. A firm can restructure its finances and operations with the help of administration in order to save the parts of the company that are still viable and pay back creditors.

Company closure options

However, for some, the situation will have become untenable due to rising gas and energy rates, increasing expenses for inventory and supplies, and declining consumer purchasing power. If this is the situation, we may discuss how to wind down the business in a legal liquidation process in an orderly manner and what this will imply for your business, creditors, and workers.

Frequently asked questions

What happens if you can't afford your gas and electric bill?

If you can't afford your gas and electric bill you should contact your energy provider as they may be able to help you. For example, they may be able to put you on a cheaper tariff. Some energy providers may have a hardship fund that you can access to help pay down any money that you owe.

Is there any help with business energy bills?

Yes, there is help with business energy bills, the government has outlined plans to help cut energy bills for businesses. Through the Energy Bill Relief Scheme, there will be a discount on business energy rates for six months from 1 October 2022.

Can my business electricity be cut off?

Yes, a businesses electricity can be cut off. It's important to act quickly - your energy supply could be disconnected if you don't make arrangements to deal with the debt. Your supplier might have to get permission from a court before they can enter your property to disconnect your supply.

Conclusion

In situations where a business owner finds themselves unable to pay their gas and electricity bills, seeking insolvency advice becomes a prudent course of action. The expertise of insolvency professionals can provide valuable guidance and options to navigate financial challenges and ensure the best possible outcome for the business.

With the complexities involved in such circumstances, it is crucial for business owners to take proactive steps and explore the available avenues for support. If you are facing difficulties in paying your business energy bills and need insolvency advice tailored to your specific situation, I strongly encourage you to complete our online enquiry form.

By doing so, you can connect with experienced professionals who can assess your needs, provide relevant guidance, and help you chart a path towards financial stability. Don’t hesitate to take this vital step towards securing the future of your business.

Insolvency & Restructuring Expert at Business Insolvency Helpline | + posts

With over three decades of experience in the business and turnaround sector, Steve Jones is one of the founders of Business Insolvency Helpline. With specialist knowledge of Insolvency, Liquidations, Administration, Pre-packs, CVA, MVL, Restructuring Advice and Company investment.