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Energy Price Fixing – Why It Matters

If you could’ve fixed the price at the petrol pump two years ago, would you?

Sure you would – knowing how much the cost of oil and its derivatives has risen over the past 10 years, it would take a rather pugnacious person to disagree.

So why then does it not follow that business energy consumers, for whom energy overheads can have a significant impact on their bottom line, are not more intent on finding the best deal for their business energy, and securing it for the next three, four or even five years?

Sure, there is an element of the unknown here, but nothing that should deter consumers from protecting their business energy prices.

The concerns quashed:

  • Premium – there is a small premium built into future pricing, sure, but it is more and more insignificant in the grand scheme of things. The suppliers know that prices are set to rise, so they have to build in some sort of protection factor into the price, however, this is almost nothing compared to the comparable year-on-year increases your business could face.
  • Business longevity – so what happens if you decide to move premises during your contract or decide to close your business? No problem, as long as you follow the correct procedures in doing so, your contract will become void and you will not be liable for any further payments.

The benefits:

  • Reduce overheads – for some energy intensive businesses, the cost of business energy can be a real handicap to boosting the bottom line. Ensure you are on the best deal for your business needs and fix the prices for as long as possible to avoid taking a hit to your profits year on year.
  • Spend forecasting – a lot of businesses like the thought of being able to ‘predict’ your energy costs every year and being able to absorb this into your annual business budget? Fixing for two to four years means you know within a small margin what your spend on business energy will be. This will enable you to focus on areas of your business where finances are more uncertain.
  • Future proofing – prices are rising and there’s no sign of them coming down any time soon. Reports have announced that energy prices are set to rise even more dramatically this year in light of recent concerns over gas shortages, and government energy policies are further compounding the issue, “adding 30% to business electricity prices, and this will rise to 50% by 2020” according to Mark Swift, a spokesman for EEF, the manufacturers’ organisation. (The Guardian, 27th March 2013.)

And talking of future proofing, why not get yourself a smart meter the next time you switch your energy contract – they are available free with many contracts and mean that you shouldn’t be billed on estimated readings again – after all, you wouldn’t put petrol in your car without looking at the reading and the cost, would you?


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