If you don’t agree to a new contract with your existing supplier, you could end up vulnerable to their most expensive rates – because there isn’t the price cap there is for domestic supplies.
Without the safety net of that cooling-off period for business energy contracts in place and the added danger of ending up on an out-of-contract rate, finding a deal that’s 100% right becomes vital. If you get it wrong, you end up in a position where there’s no turning back once the contracts have been signed.
There are things to consider when you begin your search for business gas or electricity – and these will differ from business to business. It’s always good practice to think thoroughly about what your business needs. Remember, you might not be able to go back once you’ve agreed on a contract.
So, this could include:
• The type of contact – this will most likely be a choice between fixed-term or variable rate (although with the wholesale energy market volatility, a variable rate is unlikely to provide any benefits in the short-to-medium term).
Fixed rates offer a set price per kWh for the duration of your contact – however, what you pay each month will vary on the amount of energy your business uses. So, it does provide some protection in times of fluctuation.
Variable rates, on the other hand, leave you vulnerable to price hikes (like we’re seeing currently and expect to see when winter comes). But on the flip side, they can offer benefits in calmer market conditions.
• The length of your business energy contract – how long will you have to commit to and is this feasible? Ask yourself ‘how much is business electricity per kWh currently?’ or ‘what’s the current market price for business gas per kWH?’ You’ll be able to use this along with usage forecasting, growth plans etc. to work out if a longer ¬or shorter deal might be better.
Remember, unlike with domestic energy, a business energy supplier buys enough electricity or gas in bulk to cover the duration of your entire contract. So, it’s a full commitment that’s difficult and costly to get out of.
• The notice period length – if you do want to end your contract when you reach that renewal window (where you can start shopping around), how much time do you have to give your business energy supplier?
• Are there cooling-off periods on offer – although, as we’ve already outlined, they’re not abundant, these deals do exist. It’s simply a case of whether a cooling-off period for your business energy contract is a must-have.