Business energy users should consider using longer fixed-term deals following new figures released by Energy Advice Line showing that the relative cost of short and long-term contracts continues to narrow.
Firms that lock in the price they pay for energy for two or three-years, or more, are now paying a smaller premium than they did at the same time last year.
According to Julian Morgan, managing director of the price comparison, switching and advice service for energy consumers, longer-term contracts continue to be a more viable option than ever for firms as protection against price fluctuations in a volatile market.
The Energy Advice Line’s latest quarterly review of energy prices shows that 36% of firms chose a contract of more than 12 months – this has risen by 12% since the end of quarter three, showing that it really is worth investing in the cheaper prices before they rise during quarter four. Fixed-term contract prices will always be significantly cheaper than the out of contract variable prices.
“This is great news for businesses that value the security of locking in their energy prices,” Mr Morgan said.
The cost of electricity has risen this quarter, up to 11.34p/kWh, but this is only a rise of 0.04p/kWh, still much better than the prices before the fall in quarter three. The wholesale market has softened and is set to continue this trend through to quarter one of 2015. Customers are asking if they should stay on out of contract rates, hoping this will drop further but our advice is not to sit on the fence but agree to a fixed-term contract in order to keep the prices low.
“As the price premium usually associated with long-term contracts continues to narrow, businesses are taking advantage and opting for the longer options.”
“If you are coming out of a fixed-term contract or moving into a new premises in the next three or four months, our advice is to take advantage of these prices and consider the longer-term options.”
Business electricity customers are still preferring to pay their contracts by Fixed Monthly Direct Debit, which is by far the most competitive choice from suppliers – 70% of contracts in quarter four chose this option. While some consumers are choosing to have more control over their payments and opting to pay on receipt this does incur a slight price premium.
The Energy Advice Line is the UK’s leading energy price comparison and switching service exclusively for businesses, and enables firms to compare the market for the best possible business energy deals within minutes.
The free service is backed by a team of business energy experts who provide a complete contract management service including advice about business energy contracts, how to avoid expensive rollover contracts and a renewal reminder service.
The Energy Advice Line also campaigns for a better deal for business energy users from suppliers and has lobbied the government and energy regulator Ofgem for greater protection from practices such as cold calling.
To access Energy Advice Line’s latest price review video, visit http://www.energyadviceline.org.uk/eddie.html
For further information, visit http://www.energyadviceline.org.uk