Keeping costs low is a crucial part of any business whether it be SME (Small or Medium Enterprise) or a Corporate entity. One way of lowering a businesses’ costs is through their energy usage. Selecting a suitable supplier with the right business energy contract can have a big impact on energy bills and savings.
What are the different types of business energy contracts?Fixed Energy Contract
A fixed energy contract is when a contract is drawn up with an energy supplier and a business will pay an agreed fixed rate for the duration of their contract.
There are two types of fixed contract, ‘fully fixed’ and ‘pass-through’.
Fully fixed – This is where the supplier fixes for the duration of the contract all elements that make up the pricing with the exception of government taxes. This is the most common type of contract used for SME customers.
Pass-Through – The energy supplier will fix the wholesale cost of energy for the contract duration but other elements such as transmission and distribution, carbon levies etc. that are set by the regulators will be passed onto the customer at whatever rate that is and these can change annually. This type of contract tends to be taken up by the larger energy user.
Once a contract is agreed on, a business will be locked into using the selected supplier for the duration of the contract with the likelihood of having to pay a fee if the business wishes to end the contract early.
Flexible Energy Contract
A Flexible type of energy contract can be custom-made to suit each individual business. Typically, these contracts benefit the very large energy users where they have enough volume to be able to buy in tranches throughout the year.
The benefits of a flexible contract mean that different purchasing strategies can be implemented that enables a business to hedge their purchasing against the price rise and falls of the wholesale energy market.
Still unsure of which type of energy contract would best suit your business?
Finding the right energy contract for your business can be tedious and time consuming but it is important for a business to shop around to see what is available.
Here at BAS Energy, we have helped businesses of all sizes find an energy contract that has been best suited to their needs and budgets. With our knowledge of the forever changing electricity and gas wholesale markets, we can help your business save time and money on your energy bills.