Pub power brokers

Obtaining the best gas and electricity deal for your pub can be a confusing and potentially costly task. Tony Halstead reports on the energy consultants focused on helping licensees find the best suppliers.

Energy costs are now becoming one of the biggest overheads in a pub business. Spiralling gas and electricity charges mean licensees can rarely afford to operate using old-style "pay-as-you-use" methods and longer-term contracts are now the order of the day. That means pub operators, large and small, are fighting to get the best deal from their supplier.

However, the number of energy companies now operating in supply, and the complexities of agreements, often present a daunting scenario for those unfamiliar with the system. Add to that intensive credit checks and an increasing number of suppliers unwilling to offer contracts to what they perceive as a parlous industry and you can see why hosts have their work cut out to get the deal they want.

Many licensees are, therefore, now using the services of energy consultants and brokers, who compare tariffs and conditions and negotiate the right deal for their customers.

Consultant Forward Energy says rising prices expected this autumn make it more vital than ever for licensees to get the best deal. Spokesman Mike Bates says getting the right type of meter and the right tariff are two essentials for every consumer.

"Smart meters, when used properly, will show when energy is being used excessively, but are a little more expensive on the standing charge, while evening and weekend tariffs are accepted as being the best tuned to licensed trade hours," he says.

Bates urges every licensee to check the small print on a contract closely and stresses the importance of giving the required termination notice at the end of a contract. "Failure to do this will result in the present supplier rolling over supply onto a new contract at a price they choose," he warns. "Never break a contract as early termination will be charged."

Meanwhile, Jon Shayler, business development manager at Power 4 Pubs, one of the biggest energy brokers in the licensed trade, warns licensees to look out for expensive roll-over rates when a contract ends.

"The result can be that licensees, through no fault of their own, end up paying up to 30% or more for their utilities than they did the previous year," he reveals.

Shayler says that although suppliers are contractually obliged to notify businesses of proposed roll-over rates, it was becoming common for notices not to arrive or for licensees to mistake them for something else because of their confusing nature.

"Consultants such as ourselves will log a renewal date and contact the licensee or pub operator at the appropriate time to ensure they do not get caught out," he says.

Case study: Battlesteads, Wark-on-Tyne​

As the Great British Pub of the Year, this pub has pulled ahead of the competition with its approach to green issues — and energy supplies didn't escape Northumberland licensee Richard Slade's notice.

He took advantage of the Business Refit Scheme, an interest-free loan scheme for new equipment, set up last year by the Carbon Trust.

The scheme is providing £100m to small companies to help them scrap wasteful equipment and introduce modern, energy-efficient replacements.

Reports show pubs have made significant savings, with small businesses saving an average of £9,000. The loans are designed to pay for themselves through direct energy savings made by licensees over the lifetime of the loans, which are available for sums between £3,000 and £100,000.

Slade borrowed £27,000 from the trust to buy new energy-saving kitchen equipment, which has realised an annual 31% reduction in LPG gas consumption and reduced electricity usage by 2% year on year. Significantly, over the same period, food business through the kitchens increased by 12%.

Case study: the Old Plough, Etruria, Staffs​

Regional brewer and pub operator Frederic Robinson is taking a hands-on approach to utility deals in its 400-strong tied estate, via its continuous management system.

Bob Ward, of the Old Plough, Etruria, near Stoke-on-Trent, has been a Robinson's licensee for 17 years. This is his third pub and he has developed a popular 60-cover dining venue, where food accounts for 70% of trade.

"Energy prices have gradually eaten into profits and finally, last year, we had to do something about it, as costs continued to escalate," he explains.

The pub was being charged the standard prices for gas and electricity, rather than entering a contract at lower rates. His provider had failed to advise him differently, and he didn't have the expertise to make a challenge.

Thanks to the work of Robinson's tenants support manager David Nixon, the business ended up saving £1,600 in gas charges and £800 in electricity charges during the first year alone.

How E.on helps cut pub overheads​

Energy company E.on has a new deal, Business Energy Manager, to help consumers ensure their consumption of electricity is appropriate to their tariff and meter type.

E.on provides a free energy monitor and downloadable software to help businesses understand their energy usage.

"The recession has highlighted the importance of reducing overheads for organisations of all sizes and this is why Business Energy Manager is a real breakthrough for our customers," says Iain Walker, head of SME sales at E.on.

Power 4 Pubs gas supply deals​

Power 4 Pubs announced two new gas supply agreements for Enterprise Inns pubs last week.

The energy consultant has hammered out two deals for Enterprise lessees — the first with Contract Natural Gas (CNG) for mains supplies and the second with Flogas for off-mains supplies.

The company estimates that sites taking advantage of the deals will be able to make savings of up to 25% in their gas-supply costs.

As part of the agreement with CNG automated meter-reading technology will be implemented, which will give licensees accurate bills and, therefore, peace of mind.

"This deal is unprecedented within the licensed trade," says business development manager Jon Shayler.

Reclaiming waste heat​

Edinburgh-based Geo Bar has developed a new air-source heat pump designed to recover waste heat from cellars and other rooms, to provide pubs with a cost-effective hot-water supply.

The system can save an average pub in the region of £5,600 a year in water heating costs.

Geo Bar says the system dramatically reduces energy bills and the carbon footprint of pub businesses. The company says its new system is designed to cut cellar-cooling energy output, which typically accounts for some 29% of total pub running costs.

"Businesses using the system will permanently re-base their overheads at lower levels and at the same time reduce their carbon footprint," says managing director Christie Slater.