A fixed-rate business energy contract sets the price you pay for your energy for a certain amount of time. Typically, the time period is 12 to 18 months. You’re able to switch energy providers at the end of the contract but if you decide to switch early, you’ll most likely have to pay exit fees.
Fixed-rate tariffs are great for controlling your budget and the rates for these contracts are usually lower than the rates for standard default tariffs.
One thing to bear in mind is that only the unit rates are fixed. So, if you use more gas and electricity than usual your energy costs will be higher.
Fixed-rate business energy contracts are particularly useful during times when the energy market is very volatile. (For example, the ongoing energy crisis in the UK.)
If you’re currently on a fixed-rate business gas or electricity tariff then you won’t be as exposed to the current price increases as other businesses. This is because your cost per unit is fixed and won’t go up if the wholesale price of energy rises.
At the end of your contract, you’ll either need to switch business energy suppliers or agree to a new contract with your current supplier. If not, you’ll automatically move onto a contract with higher rates (more on this later).