The prospect of some normalcy returning is looking more likely with the roll-out of vaccines across the UK. Now is the time to start thinking about finding savings to keep business costs down. As a result, many business owners will now be asking: should I fix my business energy prices until 2022?
Unique circumstances
Demand for business energy was low in 2020. Many employees were forced to work from home during a turbulent year where lockdowns had a decisive impact on the economy. With a return to work looking likely, however, chances are high that energy prices will increase over the next year.
Traditional wisdom would tell you that fixing your energy prices could come with a peace-of-mind penalty. However, the unique circumstances brought about by COVID-19 have challenged conventions. That’s why it may be a good time to fix your energy prices until 2022.
What is a fixed price energy tariff?
A fixed price energy tariff will lock the price of energy. This means you’re not at the mercy of a fluctuating market if the price per unit looks like it will go up.
Fixed-rate deals usually last between 12 and 24 months. These deals lock down the price you pay per unit – but not how many units you consume. Your energy bill will still be determined by the amount of energy that you consume. However, you are assured that your price per unit will never deviate from the fixed rate that you signed on for.
How does this differ from a variable-rate tariff?
With a variable-rate tariff, your energy bill will be impacted by market changes. If there’s a surge in global energy prices, you can expect higher bills than usual, but if the prices fall – you’ll pay less.
The decision between signing up for a fixed price energy tariff and a variable-rate tariff will come down to whether you think that energy prices will go down or up over the period of the contract. You also need to assess whether your business would benefit from the peace-of-mind that comes with a fixed price tariff.
Can we expect prices to go up or down?
While energy prices dropped during 2020 at the height of the COVID-19 pandemic, experts predict that power demand will recover this year.
Factors that have played a role in increasing energy demand:
- Increasing consumer confidence
- The roll-out of COVID-19 vaccines
- A cold UK winter
As we adjust to a new working world, energy prices are expected to increase over the coming months.
This is where a fixed price energy tariff comes in handy. By locking your energy at a fixed cost now, you protect your business against the risk of rising prices over the next year.
So, should I fix my business energy prices until 2022?
Given the current global landscape, choosing a fixed price energy tariff could save your business hundreds or even thousands of pounds.
How do I get the best rates?
The best way to approach your business energy needs is to consult an expert. Every business has different needs and there is no one-size-fits all approach to finding the best energy provider in this highly competitive market. An open mind and thorough research is vital to negotiating the best plan for your current requirements.
Experts you can trust
At Smarter Business, our team of experts will look at your specific business requirements and determine whether your specific business should:
- fix your energy prices until 2022;
- switch to a new energy supplier;
- or restructure your approach to energy consumption.
If you’re interested in cutting business energy costs, and finding a tailor-made approach to your business energy needs, get in touch today.
