A four-step guide to choosing the best business energy contract.
Over the last five years, Utility Helpline has dedicated itself to finding the best price for our business energy customers. As industry insiders we understand, more than anyone, the difficulties businesses are now facing with rising energy prices. What once was one among many bills has become more a beast than a bill. We can, of course, do whatever we can to keep those bills down. And part of that it not only choosing the right supplier, but deciding on the best business energy contract for you.
We appreciate this can be a complicated business, and not a process many businesses have the time to full consider. To that end we have detailed below a very simple four-step guide to the various kinds of contract available… you can then decide which one suits your business:
Consortium bulk purchasing
You may actually have read recently that because of the rising energy costs that we all face, some organisations are pitching in together, to create strength in numbers and therefore a better purchasing position. This is called consortium bulk purchasing and is particularly popular with local councils, who have huge energy needs, and can quite easily merge their energy demands and therefore drive prices down. This is a form of group purchasing and, just like every similar trade, it’s a matter of economics, of supply and demand. Further, if it’s a fixed contract, for perhaps three years, it can also insulate organisations from market fluctuations. If flexible however, they might also benefit further from checking the market, on perhaps an annual basis.
Multi-site central buying
Following a similar economic model of supply and demand, if your business has multiple sites, instead of negotiating contracts individually, you might bundle up all your energy requirements into one larger contract. This is liable to be far more attractive to an energy company, who might therefore offer a more competitive deal to your company, helping you control the costs associated with energy demands. This form of contract is called a multi-site central buying contract. It also benefits you in simplifying the accounting side of your energy usage, as it means you only have one contract and therefore one bill, to contend with.
Fixed price and flexible price contracts
By far the most common types of energy contracts, however, are fixed price and flexible price contracts. Dealing first with fixed price contract, they really do what they say on the tin: at the beginning of the contract, usually for three years, you fix the price you pay. It’s really the same as the mortgage on your home, and like a mortgage, relates to the level of risk you are willing to take. If you are quite wiling to entertain a fair level of risk, you might want to read on… to flexible contracts. However, if you perhaps run a smaller business and want to know in advance what you need to pay each month, a fixed contract will give you that assurance, whilst also creating a fixed cost for bottom line. Flexible contracts, in contrast, track movements in the wholesale energy industry. So… if prices go down, you will benefit; although, of course, they might also go up. As there is more involved with buying energy at just the right time, this contract usually suits larger organisations. Whichever contract suits your requirement, call Utility Helpline and we will be happy to talk you through it, and make sure you are on the right track.
Published by Utility Helpline on (modified )
Wholesale Energy Prices Update 12/03/2021
Wholesale Energy Prices Update 05/03/2021
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