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The world of business electricity and gas can be very confusing. There are many terms and jargon that you may not be familiar with. Variable and fixed-rate tariffs are the most common, but did you know there are five other energy contracts?
Different industries and businesses have unique demands and as a result, various energy contracts were created to meet these differing needs.
Some energy contracts are circumstance based, such as when your business grows or moves premises, so it’s ideal to understand what the different types of business energy contracts are and how they work.
To clear up the confusion, we’ve explained the different types of business energy contracts and their pros and cons.
Variable
This type of business energy contract is linked to market activity, so your unit rate can increase or decrease throughout the duration of your contract. This means that if the market price increase, then you’ll end up paying more.
If you’re on a variable energy contract, then it can be difficult to calculate your bill based on usage. If your business isn’t opposed to risk, then you can benefit from falling market prices. However, this will need careful monitoring and planning from you.
| Pros | Cons |
| There are no exit fees for a standard variable-rate energy contract. | The energy market prices tend to rise over time, rather than fall. |
| You aren’t tied to a contract, so you can leave at any time. | It can be difficult to research the energy market consistently, especially when you have a business to run. |
| If the market prices are low, then you can benefit from reduced business utility bills. | Not knowing how much your energy bill is every month can make it difficult to budget. |
| You can switch to a different energy contract whenever you want. |
Fixed
Fixed-term energy contracts charge a set price per kWh for the duration. This doesn’t mean you’ll pay the same every month: only the unit rate and standing charge are fixed, so the actual cost will depend on average monthly usage. This type of business energy contract is hassle-free and affordable.
| Pros | Cons |
| You’re protected from rising energy market prices. | You’ll have to pay an exit fee if you leave the energy contract early. |
| A wider selection of fixed-term energy contract deals. | Automatic rollover when the contract ends may result in a more expensive plan. |
| Typically, these types of energy contracts are the cheapest. | If the energy market prices fall, you’ll miss out on a better deal. |
Deemed
Deemed contracts happen when your current tariff ends without switching suppliers or arranging a new deal. If this happens, suppliers will place you at their priciest rate, so we suggest trying to find a new business energy contract as soon as possible.
A deemed contract can also apply when a business first moves into a new premise. Despite being so expensive, these types of gas and electric contracts provide fair terms and conditions to all customers and have extra regulatory protections.
| Pros | Cons |
| No termination fees when exiting a deemed contract. | Very expensive. |
Rollover or evergreen
As the term suggests, rollover energy contracts, also known as evergreen, are where your plan rolls over when it expires. You will enter a new contract for another year, and you could potentially be charged higher rates as a consequence.
| Pros | Cons |
| Since you’ll be staying with the same energy supplier, it’ll be easier to sort payments. | Payments can increase as utility companies take advantage of businesses that do not switch energy contracts or to new suppliers. |
| Hassle-free as you won’t need to switch suppliers and find a good energy contract. | Termination fees if you leave the contract early. |
28-day
A rolling 28-day energy contract is for businesses that haven’t switched since the energy market was deregulated.
| Pros | Cons |
| No termination fees when leaving the contract. | Unit rates can increase so you’ll be charged more. |
Business energy contracts differ from domestic plans. They’re usually longer, with contracts being in place for up to five years. Unlike household energy plans, there isn’t normally a cooling-off period, so it’s important to follow the right steps to find the right business energy contract for you.
Don’t waste time
If you know that your business energy contract is coming to an end, you’ll get a better deal the sooner you act.
If you see a cheaper tariff, then you must enquire about switching as soon as your previous contract is up. If you wait until the day your plan expires, then the market prices may have increased, and you’ll lose out on a good deal. Or you’ll have left it too late and your current utility supplier may have placed you on a rollover contract.
Determine what you want
Before making the switch, determine what you want from your new business energy contract. Do you want stability and predictability with a fixed-term contract? Or do you want to switch to green suppliers to boost your business green credentials? Knowing exactly what you want will help you find the right business energy contract.
Calculate your current business usage
Taking regular meter readings, either through a smart meter or the old-fashioned way, can give you more precise information about your energy consumption which will help to negotiate a new business energy contract.
Use a utility broker
It’s difficult running a business. Why make your life even more stressful by trying to find the best energy contracts?
Using a utility broker will take the weight off searching for the best deals and packages, so you can focus on the important things, like growing your business.
At Utility Bidder, we understand that every business is different. That’s why we take the time to get to know you and find you the perfect energy contract.
Why not contact us today and see how much you could save?
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Let’s save time, can we automatically gather meter information?
? What does this mean?Does your meter number end in any of the following?