In a changeable energy market, deciding whether to sign a fixed or flexible energy contract can be confusing. Below, we have summarised some of the pros and cons of each of the two options.

Fixed Contacts

The prices for your energy contract are fixed on the day you sign the deal, for the entire contract term. These are recommended if you feel you are signing on a day where market prices are not inflated.

Pros

• Peace of mind.
• No nasty surprises should the energy market price spike.
• Avoid having a different price each month.
• A day and a night rate; if you can take advantage of switching energy consumption from energy typically used during the day to the night (typically charged 00:00 – 07:00), you can save money by taking advantage of the comparatively cheaper night rate.

Cons

• Risk of overpaying if market prices fall during the contract term.
• If you use more energy in the summer compared to the winter, this can work out more expensive (based on the ideology that flexible trading deals can work out cheaper in the summer (in general market prices are cheaper in the summer)

Flexible Contacts

Typically reserved for large energy consumers, flexible contracts allow consumers to do a series of energy commodity purchases during the contract term, taking advantage of dips in prices, and different energy prices for different times of the year.

Pros

• If the market price is inflated at the time you are due for renewal, flexible trading deals give you the ability to make a series of purchases at different times of the contract term.
• Spread the risk across multiple purchases.
• Hedge out periods where energy prices can be particularly high/volatile.

Cons

• If market prices increase during the term, it will likely cost more.
• A potentially different unit price for each month of the contract.
• Extra work budgeting energy costs.

For support and advice on the best contracts for your business energy, get in touch today.