Is now the best time to renew your energy contract?

Recent headlines suggest that the decline in wholesale gas prices will lead to cheaper energy tariffs. What does this mean for your energy contract and is now the time to switch and save?

The world is currently facing an unprecedented crisis. Predictions from the UK government suggest that the current lockdown restrictions will cut the economy by a third. What will this mean for you and your business?

Some analysts are predicting that the falling gas prices will lead to cheaper energy contracts while others suggest the economic downturn will force energy providers to write off large sums of debt from customers unable to pay their bills.

That said, we spoke to energy experts, Smarter Business, to see whether now is the best time to make a switch and to understand a few golden rules to keep in mind when searching for the most competitive quote.

Look to switch your contract every 12 - 18 months

As a general rule, you should consider switching your energy contract every 12-18 months, or whenever the deal you’re currently on comes to an end.

If you don’t sign up to a new deal yourself, your current supplier will probably automatically move you onto a standard variable tariff which is often one of the most expensive packages on offer. To avoid this, make sure to keep an eye on the calendar so you know when to switch.

Switch before the cold sets in

The best time to switch is often around October, just before winter arrives. With the days getting shorter and the sun setting earlier, it’s safe to assume you’ll need more electricity to heat your business premises. That is why making the switch before the cold sets in will help you to spend less at a time when you’ll be using more.

Avoid paying an early exit fee

The best time to switch in your contract is when you no longer have to pay early exit fees. You can keep track of when this is yourself, but suppliers should also alert you in writing so that you don’t need to.

Know your contract type

These are the five main business electricity contract types offered by suppliers. Charges and tariffs vary for each so knowing which one you are on currently and what may happen if you do not switch are vital in making savings.

Fixed term – This type of contract will charge you a set price per unit (kWh) for the duration of your contract. This does not mean that the total amount you pay each month will be fixed, but that the price per unit will not change. This amount at the end of the month will still vary depending on your consumption.

Variable-rate – This type of contract will charge you a unit rate (kWh) that is based on the wholesale market price. Your energy bill will increase and decrease depending on price fluctuations.

Deemed rate – This type of contract will take effect if you allow your current contract to lapse without negotiating a new deal or switching providers. If this happens, you will automatically be placed on this rolling contract which is often a commercial suppliers’ most expensive rate.

Rollover – This contract type is used just before your expiration date when you haven’t agreed to new terms with your current supplier. Expect that unit rates will be expensive on this.

28 day – This is for businesses that have not switched their contract type since the energy market was deregulated.

Compare energy suppliers

We’ve heard time and time again the importance of drawing comparisons when shopping for a new energy contract and one of the easiest ways to do this is through an energy broker.

Brokers, like Smarter Business, work with the large business energy suppliers in the UK, including some of the Big 6, as well as with smaller companies. Drawing comparisons on the business energy packages offered by both will help you find the best deals on business gas and electricity.

It’s that simple! Let an energy broker do the hard work for you. They will compare the best UK business energy suppliers and help you switch.

This article does not necessarily reflect the opinions of the editors or management of EconoTimes