Fixed versus flexible tariffs
Options
How much do you think about how you buy your energy? Most businesses sign up with an energy supplier and accept the monthly charges as part of their ongoing operational costs. But other options are available which may help you save money and reduce your environmental footprint. One of these is to opt for flexible energy purchasing as opposed to a fixed-rate contract.
What is flexible energy purchasing?
Fixed energy deals provide a high degree of budget certainty; you know roughly what you’re going to pay for your energy use from one month to the next. However, energy prices are fluctuating all the time.
Note. Going for a flexible contract with your energy provider means you could take advantage of market troughs when prices fall. There are also a number of hybrid options available.
Might it be for you?
Like fixed contracts, flexible deals are also normally for a set duration, but they link prices to market levels. You’re allowed to choose when and how much energy you buy for any given period within the contract, based on your needs at the time. Essentially, you only pay for what you use.
Deals
Traditionally, flexible deals allow buyers to trade slices of supply as low as 1MW for electricity and about 30,000kWh for gas. Plus, you can usually combine the two options by locking in a portion of your energy needs at a fixed price. This may enable you to gain some budget certainty, while leaving the remainder flexible and able to take advantage of energy price fluctuations. An alternative is to opt for a fixed base-load volume at set or flexible prices, in tandem with the option to buy the remainder of your energy requirements from the market whenever you choose.
Who’s offering these deals?
All the UK suppliers offer fixed-price deals, and most - including the so-called “Big 6” - also offer variable pricing, along with monthly and quarterly block purchasing deals. Contractual arrangements typically last for several years.
Tip. If you’re interested, the best place to start is to speak to your existing supplier, as they’re likely to offer a flexible deal.
Note. Be warned that some flexible deals are only open to those with demand above about 10GWh.
Green benefits
To take advantage of flexible energy contracts, you need to understand how and when you use most energy. This monitoring activity will enable you to get a grip on your energy use, therefore lowering your environmental footprint.
Warning. To reap both the green and financial benefits, this process can demand considerable management time.
Tip. Flexible deals are only really worth considering if you have significant energy demands and the management time available to keep on top the process.
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