Energy Contract - Predictions, Shall I seal in to a 3 year term or not.

[TerranceGer]

Restaurant business.

I have narrowed down to two options for electric energy contract.
1) 22.8p a unit at £1.57 Standing charge at 3 YEARS
or
2) 27.8p a unit at £0 Standing charge at 1 YEAR.


It works out cheaper with option 1 but worried that sealing into 3 years might miss out on a drastic drop or do you think that's already happened.

On the other hand if I don't seal in to the 3 year deal and after 12 months prices have rocketed could be a worry.

What is other business owners impressions of the energy costs and its future and those deals ....

Appreciate any time spent reading and answering

Cheers,
Commis Chef Derek

 

[pentel]

If your prices you are charging is based on the 3 year deal then take it. You then have at least one element of your costs fixed and you don't need to go through the haggling process again.

We have just gone through this and have fixed for 3 years at around 26p, so it looks like you have done well!

 

[Stephen Ball]

We'd recommend just checking those rates against those you can find on quoterunner.co.uk.

Which supplier are those rates from? I ask because some suppliers' rates are NOT fixed.

Your thoughts above are totally normal and a question we're asked every day. It's all a matter of personal opinion and your business model. Like taking a view on mortgage rates really. If your business model works at the 3 year deal then ok.

What we can say is that the wholesale market has already fallen dramatically from it's major highs, but as we know, it has the scope to significantly increase. Will we get back to pandemic-price levels?- we all hope not because if it takes another pandemic to reduce wholesale energy costs further, then I'm sure your energy rates might be the least of your worries.

Happy to guide on any rates you get elsewhere too.

 

[R&S]

Restaurant business.

I have narrowed down to two options for electric energy contract.
1) 22.8p a unit at £1.57 Standing charge at 3 YEARS
or
2) 27.8p a unit at £0 Standing charge at 1 YEAR.


It works out cheaper with option 1 but worried that sealing into 3 years might miss out on a drastic drop or do you think that's already happened.

On the other hand if I don't seal in to the 3 year deal and after 12 months prices have rocketed could be a worry.

What is other business owners impressions of the energy costs and its future and those deals ....

Appreciate any time spent reading and answering

Cheers,
Commis Chef Derek

Hi TerranceGer,

Looking at what you have put forward it would be prudent to know the ins and outs of the proposals put forward by the suppliers in question as there are clauses which can trip people up.

It is clear that at the end of 2023, the government brought into legislation the energy act 2023, in the short term this will see a rise in non-commodity costs.

In the summary Impact assessment published in April 2023 prior to the energy act been written in law it states small to medium enterprises are expected to front “proportionately higher costs” than domestic and large scale industrial. It is also quoted that these policies are essential “but may increase non-domestic consumer bills,at least in the short-term. The deployment of low carbon hydrogen through a levy (annex1.5) could place costs on suppliers and increase non-domestic consumer bills”

I think a good bit of shopping around and professional advice could help manage the situation and give you some protection. The wholesale cost is unlikely to fall any further.

Feel free to get in touch to discuss.

Thanks