How can pubs save money on energy bills?

By Rebecca Weller contact

- Last updated on GMT

How can operators save money on energy bills? (Credit: Getty/PM Images)
How can operators save money on energy bills? (Credit: Getty/PM Images)

Related tags: Finance, Energy costs, Technology

Pubs could see a 56% increase on energy bills following last week’s announcement from energy regulator Ofgem, however, some simple changes could save licensees money in just a few months.

As of 1 April 2022, the energy price cap has been set to rise between £693 and £708, tariff dependant, for 22m customers, while the reduction in VAT for pubs is also set to end in the same month, increasing from 12.5% to 20%.

The rising cost of energy has been due to wholesale gas prices quadrupling​ in the past year according to Ofgem, which has caused a stir in the hospitality sector as some operators have already seen their bills rise by as much as 118​%.

Half Moon & Seven Stars pub in Preston, Kent, licensee Dave Cullen, has been determined to save on energy costs wherever possible by installing smart switches which enable him to control what appliances are on and when from his phone and have helped reduce usage by an average of 11 hours a day.

The licensee also recently started taking his own meter readings, turning the pub’s outdoor lights off at 10pm, changed bulbs to LED, and had new gas fryers installed, which cost £1,800 and, despite his gas bill being slightly higher, the new measures have paid off as the pubs January bill saw a reduction compared to previous months.

Massive change 

Cullen said: “It might sound stingy and years ago, you’d have said you're tight, however, if you're saving £250 a month just for not turning the lights on for half hour it’s worth it.

“I'm annoyed we did not try something like these three or four years ago, or even more. If I'd have done this six, seven years ago, I’d have been thousands in front by now. We’ve only done it for past three months, but we've noticed a massive change.”

Energy supplier EDF advised businesses to look at their tariff and perhaps instead of a standard renewal, allow energy contracts to drop to out-of-contract rates to see if market prices decrease.

However, EDF also warned contract rates can be amended at any time by a supplier, so licensees need to be cautious about this option as the rate presented on one day, could increase the next to reflect the market.

Another option could be signing a fixed price contract, as while it might appear expensive, it provides a stable price for a set period of time, but EDF advises to check the terms and conditions of any fixed price contract to see if the supplier can unlock the contract at a later date and change the rates.

Energy cost saving tips

  • Reduce energy consumption between 4pm and 7pm
  • Install smart switches
  • Research contract options
  • Change to LED lightbulbs
  • Double glazing
  • Turn lights and heating off in empty rooms
  • Loft installation
  • Take your own meter readings
  • Consider reducing the use of outdoor lighting and heating

Controlling the times energy is in use could also significantly reduce overall cost.

Energy is priced on 48 half hour time slots each day and the price varies significantly for each 30-minute period, with the most expensive time of day between 4pm and 7pm on weekdays according to EDF.

Reducing energy consumption in this three-hour timeframe could save money, however, to benefit from this, businesses need to sign a five-rate structure contract.

While making changes such as lower wattage bulbs, double-glazing and being conscious of when and how appliances are being used are all efficient energy saving tactics, Wethrift money-saving expert Nick Drewe advised publicans to invest in loft insulation.

Further strain on pubs

Drewe said: “In terms of cost-effectiveness, loft insulation is the cheapest and easiest to do, costing about £250 if you opt for mineral wool insulation, this will pay back in just a couple of years.

“The UK’s cost of living is rising, electricity in particular, after unprecedented wholesale costs forcing Ofgem to lift the price cap, pubs and other hospitality could see a 56% increase in their energy bills come April next year.

“These increased costs are expected to put further strain on pubs, along with other operating costs also increasing, including fuel and delivery costs, product costs and the National Minimum Wage.”

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