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It’s a question that you’re likely to come up against when you look at renewing your business energy contract, and there is no right answer. However, we’ve pulled together some information to help you make the best possible choice for you:
Longer contracts allow you to lock in energy prices for a number of years – even up to 5 years in some cases – meaning that if the market skyrockets, you’ll be paying below the odds. Whilst energy prices do fluctuate on a daily basis, it is predicted that they will continue to rise for the foreseeable future.
Locking in your energy price for a number of years can allow you to budget better – when you know more or less what you’ll be paying for your energy, you can factor those costs into your projections with greater accuracy.
A longer contract is great if you’ve found an unbeatable price or a supplier that you’re happy with. Additionally, they mean that you don’t have to think about switching for a decent chunk of time.
Shorter contracts, usually lasting a year, are an alternative to multi-year contracts. They are often cheaper than longer contracts, although you risk losing out when you next renew if prices have risen as predicted.
That said, shorter contracts can be a good choice for a number of reasons:
Your energy use may change
If your energy requirements are likely to change substantially in the next few years, a shorter contract may be appropriate for you. If you take on a long term contract, and your energy use rises part way through, you may incur hefty charges if your energy use rises above your agreed limit. If this is your situation, it’s worth speaking to an energy expert to get their advice and source the right quote for you.
You want to try different suppliers
If you haven’t found a supplier that you’re happy with yet, you may want to try a few different companies, until you find somebody whose customer service knocks your socks off. Just remember to switch provider when your year is up, so that you don’t end up on pricey out of contract rates.
You might move premises
If you’re planning to move premises in the near future, it makes no sense to lock into a multi year contract. Cancellation fees are usually lower on shorter contracts, meaning less to pay out if you do move mid-contract.
You’re a new business
If you’re a new business you may not be completely sure about what your energy usage will look like. You don’t want to take on a long contract and then discover you’re consistently over or under where you thought you’d be. Additionally, many energy companies will charge if you default on a contract regardless of the reason – meaning if your business doesn’t last, you may end up out of pocket.
For more information about what to do if you move business premises, read our handy guide.
Whatever your situation, our advisers can help you to find the best business energy rate for you. Get a quick quote now or call us on 0800 411 8830.
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