What is a Fixed Contract?

A fixed business energy deal means the price you pay for energy is set for 1 to 3 years. With a fixed rate, you know exactly how much you'll pay per unit of energy during the contract period. This allows your business to accurately budget energy costs without any unexpected price changes.

What are the pro's and con's?

Clients often inquire about the advantages and disadvantages associated with different contract lengths. When considering short-term 12-month contracts, it's important to note that the unit rates are typically higher, given the lack of a long-term commitment. The decision hinges on the gamble of anticipating whether energy prices, known for historical upward trends, will either decrease or continue to rise. Additionally, your business plans and the desired level of commitment play a crucial role in this decision-making process.

Opting for a 36-month contract, on the other hand, often brings about the benefit of securing the best and most competitive rates. This stems from the extended commitment to a supplier. Beyond the financial aspect, the longer contract duration provides the peace of mind of not having to worry about energy contracts for the next two and a half years, until your renewal window opens. It's a strategic choice that aligns with both cost-effectiveness and long-term stability, catering to the preferences of your business.

Who should consider a fixed business energy contract?

Fixed energy rates are a good choice for businesses that:

• Want predictable, stable energy costs they can plan for

• Don't want to get hit with sudden price increases

• Worry about energy prices drastically fluctuating up and down

• Need to keep expenses under control to remain competitive

How to choose the right fixed contract

To pick the best fixed rate energy plan, consider:

• Comparing prices across different suppliers to get the lowest rate

• Whether you want to lock in rates for 1, 2 or 3 years based on your needs

• Avoiding contracts with expensive termination/exit fees, unless you are sure you can commit long-term

• Selecting a reputable, well-reviewed energy supplier that other businesses recommend

Taking the time to weigh these factors will ensure you secure a fixed energy deal that works for your business's situation in terms of budget, length of commitment, and customer satisfaction. Doing your research upfront pays off.

What is the difference between fixed and variable energy tariffs?

Fixed-Rate Tariff:

• You pay the same price per unit of energy for the entire contract duration (e.g. 1-5 years)

• The rate is locked in at an agreed amount

• You usually have to pay an exit fee if you want to switch contracts before it ends

• Provides price stability and predictability

Variable-Rate Tariff:

• The price you pay per unit of energy fluctuates up and down

• Energy costs can change with no set timeframe

• Typically no long-term contract so you're free to leave anytime

• No exit fees but prices are unpredictable

The key distinction is that fixed-rates protect you from rising costs by locking in a set price, while variable rates fluctuate with the market. Fixed gives certainty but less flexibility, whereas variable offers flexibility but unpredictable pricing.