How to get the best energy deal

As an astute business owner or commercially aware employee you’re keen to keep your fixed costs down. This includes what you spend each month on your energy.

You know that being in a contract secures you cheaper rates, but did you know that when you agree the contract can have a big impact on the price you pay.

Energy prices are continually changing. Today we’ll take some time to help arm you with the facts, so you can save.

How often do energy prices change?

 Gas and electricity are traded commodities and prices can change by the second. Often there are hundreds of trades on a contract every day, meaning that prices are in a continual state of flux.

There are many agencies online which track wholesale energy prices, and they usually look at the market three times a day – once in the morning, again in the afternoon, and finally when the market closes.

The cost of energy will be just one of the factors an energy supplier uses to set their tariffs. They’ll also consider their other costs, such as transmission, distribution, taxes, overheads, and the margin they wish to maintain.

Why don’t I see these price fluctuations?

 If you’re classed as a small or medium enterprise (SME) it’s likely you will be insulated against this market volatility.

Back in the 1990’s when the energy market was de-regulated, policy makers had a conundrum to solve – without smart meter technology, and with the cost of half-hourly metering prohibitively high, how could they accurately predict the demand on the power network from households and businesses, and forecast when would most power be used?

They solved this problem by applying what is known as a profile class to every supply. If you operate a low consuming business, it’s likely you will be a profile class 03 or 04.

Rather than creating a bespoke price each time they’re approached for business, energy suppliers create a “price book”. This price book still fluctuates, but at a much slower rate than the market. When you hear that prices have gone up in the news, it’s because a supplier has issued a new price book.

If you’re a larger consumer you represent a greater risk to the supplier as they’ll need to purchase a higher volume of energy. They’ll create a bespoke price to offset this risk, rather than use the price book.

So…when is the best time to arrange

 We like to keep things simple at Rypro Energy. The market and trading of energy can be complex, but you don’t need to know the ins and outs and the detail. You just need to know when is best for your business to secure the most competitive deal.

Simply put the best time to arrange a new energy contract is as far in advance as possible. Most suppliers will quote you up to a year before your current deal is due to end. Our advice is snatch their hands off. Whilst there may be anomalies caused by political or global events, purchasing power in advance is invariably the most economically sound approach.

The table below shows the market as it stood at 09:40 on 15 November 2017. Quite the difference for purchasing a year ahead…

 Electricity (per megawatt hour)

Day Ahead                                      £50.00

Year Ahead                                     £47.18

December 2017                             £52.19

Q1 2018                                           £53.11

Gas (per therm)

Day Ahead                                      £51.75

Year Ahead                                     £48.32

December 2017                             £52.84

Q1 2018                                           £53.80

But I’m tied into a contract? What can I do to reduce my prices?

It’s likely that you are already in a contract with an energy supplier. Contracts range from one through to five years and, short of selling your business or going into liquidation, there’s no way out of it. Unlike domestic supply contracts most business contracts don’t contain early termination fees so you’re invariably held to what you signed until the term end date.

You can still act to set your business up on the best possible footing for the future:

  • Find your contract end date and submit a termination notice. It’s vital that you know when your contract ends. Although your supplier is likely to contact you in the run up to its expiry, you risk entering onto Standard Variable or Out of Contract rates should you not act in time. Even worse, some suppliers automatically renew your contract at a higher rate for a further year, meaning you’re locked in paying more.
  • Agree a contract in advance. Purchasing energy in advance is a sure-fire way for the supplier to save money and protect their margin, and they pass on this saving to you through cheaper rates. Most energy suppliers are happy to agree a contract in advance, sometimes up to a whole year before your existing one ends. This means two things – one, you move seamlessly to a new contract with no Out of Contract rates, and two, you benefit from cheaper prices.

Rypro Energy website

We can help

We understand that you’re busy growing your business and that your utility contract isn’t likely to be at the forefront of your mind.

We can take the stress and hassle out of managing your energy accounts, and searching for the most competitive deal. We monitor the market daily, and our relationships with the UK’s leading energy suppliers and the technology we use means we can act fast, and secure your business a low-cost energy future.

The easiest way to future-proof your business energy spend is to utilise our expertise to agree a contract at today’s prices ready for when your current contract ends. Contact us today on 07887 757589 or email we’ll do the hard work for you.

For more great hints and tips be sure to check back on our blog

No Comments

Post A Comment