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 are opting for more short term contracts in response to the current price drops, and hoping that the trends will be similar when their contracts are up for renewal in the same quarter of 2016.
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 fluctuation in a volatile market.
The Energy Advice Line’s latest quarterly review of energy prices shows that 78% of business customers chose a contract of only 12 months, with the amount choosing contracts over 12 months falling 14% from quarter four 2014 shows that customers are hoping to keep up to date with fluctuating costs instead of locking in to a fixed rate contract for multiple years when 2016 may be cheaper still. Regardless of the contract length, fixing yourself into a contract is always a good idea as these prices are usually significantly cheaper than out of contract variable prices.
“Our advice, if you are in the window to agree a contract, is to snap up the competitive fixed term prices while they are still available,” Mr Morgan said.
“If you are thinking about hanging on for a cheaper rate and staying on out of contracts rates hoping that the price reduces in the next quarter, our advice is to not sit on the fence, but always agree a fixed term contract to make the most of cheaper prices.”
The cost of electricity has dropped this quarter, down to 10.93p/kWh, these are the lowest prices that we have seen since quarter four 2012. Unfortunately, the wholesale market has not been as friendly very recently and we have seen a few upward spikes to we do not expect this trend to continue into quarter two.
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 – just over 70% of customers in quarter one chose this option. While some customers are still choosing to have more control over their payments and opting to pay on receipt despite this option incurring a slight price premium.
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 have 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