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When A Fixed Contract Isn't Fixed?

A fixed business energy contract is not always as ‘fixed” as it would first appear to be. Due to the current market volatility, numerous customers have received notifications of price increases on their fixed gas and electricity prices from their business energy suppliers. How can this be?

Your business may be on a fixed energy contract that is not as “fixed” as you thought. Might it make sense for you to change from fixed business energy contracts to flexible contracts in the future? What unexpected surprises can you expect in your business energy tariffs going forward? Are energy prices expected to fall or keep rising? These are only some of the questions we will answer in this article.

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Why Is My Fixed Contract Not Fixed?

The reason that an energy supplier can adjust the prices on so-called fixed business energy contracts is down to the finer details. Business energy contracts differ according to the small print included in a contract’s terms and conditions.

For this reason, a business customer should always peruse the terms and conditions of their contract in detail. Yes, it can happen with domestic energy bills too.

Business Energy Comparison allows SMEs, medium-sized, and large businesses the chance to compare business energy deals. In this way, you can be sure to find the energy contract that best suits your business.

Fixed-term Contracts vs. Flexible Contracts

When you sign a contract including fixed business energy tariffs, the supplier will fix your gas and electricity prices to a certain rate. Most business energy contracts of up to five years include premiums on certain commodity and non-commodity elements.

Non-commodities hold more risks and make up the majority of your energy bills. Due to the premiums included in the contract, your supplier can add any increased energy costs they experience to your energy bills. So, considering this, the “fixed” business gas and electricity prices quoted on your contract aren’t actually fixed at all.

Large businesses often favour signing energy contracts with openly variable, flexible rates. In this way, they procure better average business gas prices or electricity tariffs over the full term of the energy contract. This is especially the case with the current market volatility.

The best time to buy energy is when the wholesale prices are lower. A flexible business energy contract can assist in reducing some of the non-commodity energy costs.

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Unpredictable market conditions in energy have led to major increases in gas and electricity prices. There has also been a reduction in sustainable energy generation in the UK compared with anticipated figures.

Over this uncertain period, many businesses have realised that their fixed contracts are costing them more than anticipated. This is not because of how much energy they are using either. As a result, they have the following alternatives:

  • To remain on the existing energy deal with their current supplier. This means paying continued higher gas and electricity tariffs until the current contract’s end date.
  • To withdraw from their current business energy contract without incurring penalties. They could secure a flexible contract, relying on a decrease in business electricity and gas prices.
  • To agree to another fixed contract after examining the fine print. The risk is, with high energy prices, a new energy supplier may not offer the same fixed energy rates they received before. It would help to have a rough idea of expected energy price fluctuations over the contract period.
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Will energy prices rise or fall?

Despite wholesale energy prices being at their lowest since the middle of 2022, they still remain high. These high prices are worrying for UK households and businesses. Demand is increasing, there are storage constraints, and energy supplies remain limited. Yet, there are some positives to draw.

Compared to this time last year, there is less reliance on gas from Russia. Winter has also been kind in 2023. You can add the government’s Energy Bills Discount Scheme (EBDS) scheduled to run until the end of next March to these factors too. The EBDS offers universal discounts on non-domestic energy.

The Energy Price Guarantee Scheme (EPGS), which caps average domestic energy amounts at £2,500 each year, ended on July 1, 2023. Due to current energy price decreases, Ofgem’s price cap adjusted to an average bill of £2,074 per year from July when the EPGS concluded. This doesn’t affect how much energy businesses consume, though.

As things stand, the current nature of energy supply and demand means price changes for consumers are not reflecting quickly.

As mentioned above, Europe, in general, has experienced a temperate winter. Businesses are making attempts to become more energy efficient due to escalating gas and electricity costs. With these factors combined, energy demand has dropped and the unit cost of both gas and electricity has reduced.

The energy market in the UK and across Europe is also experiencing something of a cooling-off period after the Ukrainian invasion and the Nord Stream 1 closure. Countries across Europe are making new energy plans by using renewable energy sources. They are also storing more liquified natural gas.

With spring and summer upon us, we should expect further gas and electricity supply price decreases.

Wholesale energy prices may have dropped recently, but your bills will remain expensive. Hence, it makes sense to carry out a business utilities comparison. Use energy brokers and consultants to find the most suitable energy contract for your business moving forward.

Compare Fixed Energy Contracts With Business Energy Comparison

At Business Energy Comparison, our goal is to assist businesses to gain a clear perspective of the available energy deal options. We provide leading UK energy supplier comparisons. We can also arrange quotes for your energy needs within minutes.

You should always be aware of current business energy prices and out-of-contract rates. We put you in touch with expert consultants and energy brokers who provide this and assess how much gas or electricity you need.

Business Energy Comparison assists you in working out the average unit rates in your business location. We assess your existing contract. taking into account the current market volatility. From there, we provide you with the information to find the best deal for your business circumstances.

We also help to find out if your fixed gas and electricity contract is actually fixed. If not, we will provide the best business alternatives for you.

Start your journey and compare business gas and electricity rates with Business Energy Comparison today. Use our price comparison tool and in less time than it takes to make a brew, we’ll compile your best prices from the UK’ s best suppliers.

Frequently Asked Questions

What happens when a fixed contract expires?

It is important to take action before your fixed energy contract expires. When customers don’t, energy suppliers could transfer them to out-of-contract rates. This happening can result in higher energy tariffs. Assess your options early and consider negotiating a new fixed contract. Otherwise, explore contracts with other energy suppliers for continued price stability.

Is a fixed business contract suitable for all businesses?

A fixed contract may not be suitable for some enterprises. Consider your business’s size, energy consumption, and any risk of price fluctuations before deciding on a contract. Consulting an energy broker can help to determine the best contract type for your specific business needs.

How can I find the fixed contract best for my business?

Compare offers from several energy suppliers. You can use Business Energy Comparison to compare energy prices. We provide you with quotes and put you in touch with experts to check the contract terms. They will consider factors like the contract’s length, pricing, and other services, to help you make your decision.