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Mitigating the risk of future energy prices

In the latest in our series of questions to the boss, we focus on the common question of “My contract end date is years away but I’m worried about future prices. How can I mitigate the risk to my business?”

Business Juice:

“It’s true there isn’t an abundance of good news in the energy market, but one positive move is that some suppliers are starting to recognise this predicament for businesses and are pricing contracts starting in late 2014, 2015 and even 2016.

“These, given the natural uncertainty of forecasting events that far in the future do carry a premium. However a future price today for a contract starting in 2015 carries only a 2% premium over contemporary prices, which is a relatively small premium to pay for certainty of price level over the long term.

“If such a forward thinking approach is not for you, you could also think about the amount of energy you’re using, as well as the price you’re paying, and make sure becoming more energy-efficient is part of your future business plans. Investing in better energy management could make a big difference to the profitability of your business as energy price rise.

“Critically, despite the low take up of the Green Deal, businesses can take advantage of this scheme to fund necessary energy efficiency actions and repay it via their energy bill.

“Ultimately our advice would be to understand your position, engage in the market and act in your and your business’ best interests.

“We’d be delighted at Business Juice to advise you on how best to tackle finding a solution for your specific needs (even if you don’t ultimately use our services!)”

If you’d like a burning business energy question answered then please contact us on 0800 051 5770 or email and you could be featured in the series.


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