What Does it Mean to Fix Your Energy Costs?

With the cost of energy constantly rising, businesses have to look for alternative measures to keep the lights on without it costing them an arm and a leg.

Another way to manage the cost of energy is to make the switch to a fixed rate to ensure that businesses are not paying higher fees every month according to a variable rate.

A fixed rate is a much cheaper option than having to be on a variable rate, as variable rates rise with costs of inflation.

You can read more about fixed energy prices and how to make the change effortlessly to save your business some money!

What Is A Fixed Energy Deal?

Having a fixed energy deal means that you are ensuring that the rate for the electricity remains the same throughout the period of the deal.

You can control how much you spend on energy as the fixed rate is charged per unit of energy and this remains a constant price, the only difference is how much you use from time to time which might cause an increase in price but not change the rates.

The deal includes the price being the same of both the standing charge and unit rates. Another positive is that businesses can keep their energy rates on a fixed rate for many years so this can save your business money.

How Does The UK High Energy Prices Affect the Energy Price Cap?

The energy price cap is a restriction set on the maximum price suppliers can charge for energy prices. This came into play to protect all consumers from being affected by the rise in the wholesale price.

Ofgem, the government regulator for energy supply in the UK has set this restriction to last up until April 2024. The price cap ensures that businesses and consumers that are on default rates with their energy supply get charged fair and cost-effective prices.

The energy price cap ensures that energy suppliers are not overcharging their customers and businesses when they are facing the rise in cost of energy from their suppliers at wholesale rates. This allows businesses to pay for energy at a cheaper retail price.

What Are the Benefits of being on a Fixed Energy Rate

Choosing a fixed rate energy deal has many benefits for your business.

Saves you long term as there is no spontaneous rise in the cost of energy as you only pay per unit of what you have used.
You get to compare different fixed rates from different suppliers to find the cheapest one.
Fixed rates are the cheapest rates available and you can be on this tariff for the longest time as long as you keep renewing your contract when it comes close to the expiring date.
You are protected against energy price hikes.
It is easier to budget for a fixed rate deal.

Should You Make The Switch To A Fixed Energy Deal?

If you are unsure whether you should make a switch between getting a fixed energy rate for your business, then keep in mind that the variable rate is ever changing despite the energy price cap.

Getting a fixed energy rate secures your business and ensures that the energy bill is consistent each time you have to pay it- with the exception that if you use more energy during the month your bill might increase slightly.

You can change suppliers even on a fixed energy deal while having to pay an exit fee with some companies, others do not have this clause. All energy companies do offer a fixed energy rate and have a variety of fixed rate options should you look to compare for the cheapest one.

Conclusion

To be protected against the price hikes of energy, switching to a fixed rate deal is your best option. This way you can ensure that you are finding an energy supplier that will be able to provide your energy needs without charging you a high price as a result of the wholesale price they are paying.

It is important to note that the energy price cap is not set on gas supply and if you have a dual tariff fixed rate, your gas rates might still be a little higher than your energy rates.

You can compare different fixed energy rates by using an online comparison service to find the cheapest energy rates for your business and save money with the potential energy prices.

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