Energy is one of the biggest costs in a pub that a licensee can actually do something about.
Running a pub has never cost more. The Morning Advertiser reported in April that pub operating costs have risen 48% over the past decade, with energy up 57%. That makes it the fastest-rising cost on the P&L. In the first quarter of this year the UK lost 305 licensed premises, more than three a day. You cannot control the wholesale market and this year’s Gulf conflict has shown how fast it can turn.
But most of the money pubs lose on energy is not lost to the market. It is lost to avoidable mistakes. Nationwide Energy has spent 25 years working only in hospitality and the same expensive mistakes come up week after week. Here are the six worth fixing.
1. Pulling your first pint before sorting the supply
Take on a new pub without arranging the energy contract and the site lands on deemed rates: the supplier’s default pricing for premises with no agreed contract. Deemed rates run far above a competitive deal, and a slow change of occupier can leave you paying them for weeks or months.
The fix is simple but has to happen early: start the supply changeover the day you start trading. It is the first thing Nationwide Energy sorts for licensees taking on a new site.
2. Judging an offer by the unit rate alone
Brokers and suppliers lead with the unit rate. Your bill is decided by more than that. Standing charges vary more than any other line on the bill: on pub contracts Nationwide Energy has quoted, they run from around 30p a day to over £40 a day, and that charge lands every day of the year, busy or quiet. Larger sites also pay a daily charge for their agreed supply capacity, measured in kVA, used or not. Plenty of pubs sit on a capacity figure someone set years ago that is far higher than anything the site actually pulls.
Two quotes with the same unit rate can still behave very differently, because of what sits underneath it. Alongside the energy itself you pay network charges and the cost of government schemes, usually grouped together as non-commodity costs. They reset every April. Some contracts fix them for the term and some pass them through as they move, so a fixed price is not always fully fixed. Ask which yours does before you compare.
Always compare the whole cost per kWh across a year, and get the capacity reviewed. That saving holds whatever the market does next.
3. Letting the contract end date choose your market
Most licensees deal with energy once every year or two, when the renewal letter arrives. That means the date, not the market, picks their price. Miss the window altogether and out-of-contract rates apply, which are as punishing as deemed rates. In a market like this one, where wholesale gas costs climbed by more than half inside a month this summer, watching the market months ahead of the end date is the difference between fixing on a spike and fixing on a dip.
Being ready matters as much as watching. Supplier prices are usually only held for a short window, often a matter of days, so collecting quotes six months out to have a look is not the same as being in a position to act. Know your end date, agree in advance what level you would be happy to fix at, and be reachable when it arrives. Groups with several sites can go further and align end dates, so no single site is ever forced to renew at the worst moment.
4. Not asking your broker the three questions
Energy brokers, consultants and switching sites all sit under one industry label: third party intermediaries, or TPIs. Unlike the suppliers themselves, TPIs are not regulated, at least not yet, and the quality of advice varies more than it should. Three questions will tell you which sort you are dealing with.
Which suppliers did you approach, and can I see what they came back with? How are you paid on this contract, and is your commission built into the unit rate? And what happens if I want to check the market again before I sign? Any broker worth dealing with has straight answers ready. Ours included, and you should ask us too.
What should make you pause is pressure. A quote that expires this afternoon, or a push towards a five-year term you never asked about, is a reason to slow down rather than speed up. A three-year contract signed in a hurry at the wrong moment is one you pay for 1,095 days in a row.
5. Paying for the supplier’s mistakes
Billing errors, back-billing for periods long past, change-of-occupier charges that were never yours: supplier admin problems cost pubs money they should never have paid, and chasing a supplier call centre is time a licensee does not have. Ofgem rules mean a supplier can generally only back-bill you for the last 12 months.
Two habits make these disputes much easier to win. Take a meter reading on the day you take a site on and on the day you hand it back, and photograph the meter with the reading visible. Keep the dates of the change of occupier somewhere you can find them again. Most change-of-occupier arguments come down to whose reading the supplier accepted, and a dated photograph settles it faster than any amount of correspondence.
Much of Nationwide Energy’s work has nothing to do with procurement. The company takes these disputes off the customer’s desk and get them put right.
When the Kings Arms in London was handed a £56,000 catch-up bill covering two and a half years of underestimated readings, Nationwide Energy used that 12-month rule to challenge it, and three months later the account sat £300 in credit.
When the Lancaster Arms in Leicester was billed almost £50,000 off the back of a wrong meter start reading, Nationwide Energy took the dispute to the Energy Ombudsman and the corrected bill came back nearly £20,000 lower.
6. Assuming the job is done once the price is fixed
Fixing a good rate settles half the bill. The other half is how much energy you use, and most pubs have never looked closely at their own consumption data.
If your site has a smart or half-hourly meter, your supplier holds a record of what the pub is drawing through the day and night. Start with the overnight baseline rather than the Friday-night peak. Whatever is still drawing power at four in the morning is drawing it every night of the year, and it costs the same money whatever rate you have fixed.
Then look at what happens when the first member of staff arrives. One of the most common patterns is a sharp jump at 7am: ovens, fryers, grills and extraction all switched on the moment the kitchen staff walk in, even though the kitchen does not open until 11.
That is four hours of paid-for energy every day, and it is usually habit rather than anything the equipment needs. A jump at 5am or 6am often means heating, hot water or cellar equipment coming on far earlier than the day requires.
Cellar cooling, kitchen extraction, heating and standing hot water are the usual candidates. A cellar cooler working against a damaged door seal, an extraction fan nobody switches off after close, or heating programmed to fire hours before anyone arrives will not show up on a quote comparison. It only shows up on the meter.
Ask your supplier or your broker for the half-hourly data and read a typical week: the overnight baseline, when consumption starts climbing, what jumps when staff arrive, and how quickly it falls after closing.
If that is not how you want to spend an evening, it is work Nationwide Energy does anyway. Its team of consultants review half-hourly data for pub sites every week. Send Nationwide Energy a year of it and they will tell you what is running when it should not be and what it is costing you.
Nationwide Energy publishes a fortnightly energy update in the Morning Advertiser because they would rather licensees understood this market than had to take anyone’s word for it.
If you are taking on a site, have a renewal coming up or have a supplier problem that you have not been able to get resolved, get in touch with the Nationwide team.
