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Due to the current fluctuations in the energy market, it further emphasizes the importance of securing a fully fixed contract. So far in 2021, 28 suppliers have entered administration, including Bulb Energy, CNG, and many more. Fixed energy tariffs provide customers with a locked-in rate per kilowatt hour for a set period for usually a year or more.
Your fixed plan will come to an end on a specific date, but you don’t need to wait until then to switch. You can secure a new contact before your current contract ends without having to pay an exit fee also known as a cancellation or termination fee. When you are in this period, we can help you compare a range of competitive prices and help you secure a contract that suits your needs.
During the energy crisis, some customers have reported unexpected unit rate changes whilst in a fixed price contract. Some customers that believed they had signed up to a fixed rate contract found themselves in this position after they received a letter from their supplier warning them of a price increase. One of these letters informed the customer that they should expect a 20% increate to the unit price for their gas. Suppliers have been able to do this due to specific information included within the terms and conditions of the contract. This is why it is extremely important to always check the terms and conditions before signing up to a new contract.
With the current unpredictable market conditions, an energy supplier explains we should anticipate “a sharp increase in the gas and carbon prices by up to 300%, reduction of wind and solar generation by 75%, shortage of gas and reduction of gas storage capacity in the UK”. The customers affected by this have been given two choices, they can either leave the fixed contract with no penalties or remain on the higher tariff for the remaining duration of the contract. This has left many businesses wondering if their fixed contract is fully fixed.
Fixed contracts are set to soar for industrial and commercial businesses, and they aren’t as “fixed” as customers may think. Coming out of the COVID pandemic, suppliers are going to struggle to forecast consumer patterns and try to protect themselves from risk. Ongoing uncertainty around home versus office working combined with suppliers having to recover commodity losses and deferred non-commodity costs, such as balancing and network charges, is already starting to bite. Post-Covid, there are too many unknowns for suppliers to price them accurately, so they are doing everything possible to de-risk contracts. It has been predicted that over the next few years, a typical “fixed” contract will begin to change.
When a customer signs up to a fixed contract they will lock in the price for the period of the contract. This will usually include a premium on the commodity and the non-commodity elements with the non-commodity being the largest part of the bill providing more risk. Therefore, most contracts allowing suppliers to pass through any increases, meaning they are technically not fixed.
The most crucial time to buy energy is when there is a decrease in wholesale prices, procuring in lesser portions to achieve a better average price rather than committing in one go. Flexible contracts help businesses reduce some non-commodity costs which is why they are usually used by large businesses.
The energy regulator, Ofgem, will implement a SoLR or “supplier of last resort” if your supplier ceased business.
No, if your supplier ceased business, your supply will not be cut off. This is because you will be given a SoLR or “supplier of last resort” to ensure you have a continuous supply of gas and electricity. Other suppliers will bid to replace the contracts of businesses that have ceased trading and Ofgem will try to get the best possible deal for the customer in these circumstances.
Ofgem will be working on finding your new supplier as quickly as possible. This will be announced on their website within a few days.
Your business contract will now be void and you will immediately be put on an “out of contract” rate which may result in your bills increasing. This will only be the case until a new tariff is agreed.
In regards to domestic customers, the protection of funds paid by non-domestic customers into their accounts “cannot be guaranteed”. Find out more information here.
Depending on your new supplier, you will still need to pay the debt to your new supplier if they have agreed to take on customer debts owed to your old supplier. If this is not the case, you will need to set up a payment plan with your old supplier’s administrators that will get in touch with you.
Businesses that use a smart meter will be appointed a SoLR and will still have access to a continuous supply. Similarly, to traditional meters, Ofgem will quickly find a suitable supplier for the circumstances. If a supplier is appointed but they can’t operate your smart meter in smart mode, it will work as a traditional meter for that time.
Ofgem advises that you should not cancel your direct debit as your new supplier will get in touch to provide further information on direct debit arrangements.
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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?