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Compare fixed and flexible business energy

Fixed or flexible business energy contracts

There’s no such thing as an ‘off the shelf’ business energy contract, because they’re tailored to each individual business, to cater for that business’s unique needs. One thing that is standard, however, is the choice of contract types. You can opt for either a fixed deal or a flexible one - there are pros and cons to both, so here’s how to decide which one would best suit your business.

What types of business energy contracts are available?

Every business has different needs, so there are a number of different types of energy tariffs to cater for this. Broadly speaking, business energy tariffs can either be fixed or variable:

  • Fixed-rate contract: where the cost per unit (kWh) that you pay for your energy stays the same for the duration of the contract.
  • Variable-rate contract: where the unit rate you pay can increase and decrease throughout the duration of your contract, depending on market activity.

Whether you’re on a fixed-rate contract or a variable-rate contract, it’s important to keep your eye on the ball. If you let your current deal run out without switching or agreeing to a new one, you could find yourself on one of these less competitive types of contract:

  • Deemed rate contract: also known as an out-of-contract tariff, these are expensive rates arranged by suppliers for customers with no formally agreed contract.
  • Rollover contract: a very expensive tariff that’s used when you haven’t agreed to a new deal since your previous end date.

Whatever the size of your business, it’s important to cut your costs - paying over the odds on an overpriced energy tariff soon adds up, and swallows up money that could be better spent elsewhere. You can avoid this by switching to a cheaper contract as soon as you can.

What are fixed business energy contracts?

Fixed rate plans lock you into one ‘fixed’ rate for the duration of their contract. This means you’ll be charged the same amount per kilowatt of energy each month until the contract has been completed. The price per kWh will stay the same regardless of whether the price of energy rises or falls in the ever-changing market.

Fixed rate contracts are often ideal for small businesses that tend to use a similar amount of energy each month. By opting for a fixed rate, you can ensure that your bills don’t fluctuate too much, so you can budget for your monthly outgoings.

What are flexible business energy contracts?

Variable or flexible rate contracts are subject to market fluctuations and changes in third party charges, so some of your monthly bills may be cheaper than others. Unlike fixed rate contracts, you won’t be charged the same amount per kilowatt, because the rates and additional third party charges can vary. This is similar to what happens with variable rate mortgages, where charges go up and down as the market prices change.

Variable rate contracts tend to suit companies that really understand the energy they use and the way their bills are calculated. These flexible tariffs let you buy the energy you need when you need it, so you can plan around your consumption highs and lows and take advantage of market rates. Though it’s more risky than a fixed rate contract, it works for many businesses.

What happens when your business energy contract ends?

When your business energy contract is coming to an end, your supplier will write to you offering you a new deal. If you don’t formally accept or reject this, chances are you’ll roll over onto your supplier’s more expensive out-of-contract rates.

To avoid this, give us a call on 0800 970 0077 so we can help you find a new deal that gives you the best value possible for your business.

When you’re getting close to the end of your business energy contract, here’s what you need to do, and when:

  • Six months before the contract end date: compare quotes from different suppliers to get an idea of what’s available. If you get one you like, you can accept the deal and inform your current supplier - the switch will happen automatically when your current contract ends.
  • 60-120 days before the contract end date: if you haven’t already agreed a new deal, your supplier will send you a Statement of Renewal - this outlines their offer of a new contract. You don’t have to accept it, and we recommend using this offer as a reference point to compare business energy rates and find a better deal from another supplier.
  • After your contract ends: your supplier will send you a final bill, and you may need to give them a final meter reading to make sure this bill is accurate. Your supplier will let you know how long you’ve got to pay your final bill. If you haven’t organised a new deal, you’ll be put on a rollover contract, or deemed rates, depending on your circumstances and your supplier.

To start saving on your business energy bills, call Make It Cheaper today on 0800 970 0077. Or, if you’d prefer, leave your details in the form at the top of the page and we’ll call you back.

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