With energy prices soaring, consumers and businesses are facing ever-increasing energy bills. With the implementation of the price cap benefiting households across Britain, enterprises are not so lucky.
The energy price cap only applies to domestic users on the standard variable tariffs, which leaves businesses at the mercy of a fluctuating and volatile market. What should companies do about their business energy consumption?
Businesses should secure a fixed-rate tariff to protect themselves from future energy price hikes. You can get the best fixed-price energy tariff deals for your business by comparing the market and using sites like Utility Bidder.
How Does Fixing Energy Prices Work?
Fixing your energy prices refers to locking in a fixed rate during a specified period. Fixed-rate tariffs ensure that your gas and electricity costs will not increase over time.
It is essential to understand that a fixed-rate tariff only freezes the unit costs and the standing charges. Your utility bill will vary monthly because of the amount of energy your business consumes.
The length of fixed-rate tariff energy contracts varies, and so do the rates. Generally, short-term energy contracts are usually between six to twelve months and are more expensive. Long-term energy contracts are far more cost-effective, usually lasting between one to four years.
Should Your Business Consider a Fixed-rate Tariff?
Businesses that want to protect themselves from rising energy prices should consider a fixed-rate business tariff. To decide which tariff is the right option for your business, consider your business’s average energy consumption, and doing so can help your business take advantage of lower energy rates.
Fixed-rate tariffs allow businesses to control their spending and budget their monthly energy costs. Depending on your business, the standard variable tariffs might be better suited because of the flexibility. A boutique store’s energy needs will vary from a manufacturing plant’s, so choosing a fixed-rate tariff might not work for your business type and sector.
Small businesses will benefit the most from fixed energy contracts, decreasing exposure to unexpected energy price hikes. Most businesses choose short-term fixed-rate tariffs leaving them room to switch energy suppliers and find better deals.
While there is plenty of uncertainty surrounding the energy crisis, a fixed-rate tariff is the better option for businesses that are looking for stability.
What Happens When Your Contract Comes to an End
Before your fixed energy plan expires, contact your energy supplier to find out which plan you will move to. In most cases, energy suppliers automatically switch you to the standard variable rate. Standard variable rates might be cheaper because the price is capped, but your tariff will increase if the price is hiked.
It is also an opportunity for your business to switch energy suppliers. Comparison shopping and securing a deal would benefit your business, either by remaining on the default variable tariff rate until the price drops below the price cap or securing a fixed-rate tariff at a lower price.
Improving Your Business Energy Efficiency
Businesses have not been spared from the impact of the UK energy crisis. Whether or not your businesses decide to stay on the standard variable rate or prefer a fixed-rate tariff, there are ways to reduce your energy consumption. Reducing your usage can help reduce your energy bills.
Monitor Your Energy Bill
While domestic and business consumers can expect higher energy bills in the coming months, double-check your energy bill to ensure that you are being billed correctly. Make sure that you are not billed for estimations.
Consider switching to a smart meter for your business instead. This allows you to keep track of your energy usage and compare it to your monthly energy bill readings.
Switch Energy Suppliers
Since the costs of fossil fuels drive the energy crisis, suppliers have been increasing their rates accordingly. The best option is to use a comparison website to find a new supplier offering a lower rate. Remember that once you switch, you enter a cooling period once your contract has been signed, and it might be costly in the beginning.
Improving Your Energy Efficiency
There are several ways to improve the energy efficiency of your business. You can save on your energy bill by switching to energy-efficient LED light bulbs, installing a programmable thermometer, turning off lights in unoccupied rooms, and turning off electrical equipment at night.
Final Thoughts
Since the energy price cap does not apply to businesses, fixing your energy bill gives you added protection from soaring gas and energy price hikes. Always compare suppliers for the best possible deal before agreeing to a fixed-term tariff plan.
