Fixed vs flexible energy contracts. Which one is right for you?

It usually starts with a surprise bill.

Not a massive one, just higher than expected. You ask around. Nobody seems quite sure what rate you’re on or when the contract ends. You check the paperwork. It’s not exactly bedtime reading.

That moment when frustration and uncertainty mix, is when most businesses first ask the question:

Should we be on a fixed-rate contract or a flexible energy contract?

It’s not just a technical choice. It’s about how much control you want over your costs, how much risk you’re comfortable with, and how involved you want (or have time) to be.

Here’s what the terms really mean and how to figure out what’s right for you.

Fixed-rate contracts keep things steady

A fixed-rate energy contract means you agree to pay a set price per unit of energy for the duration of the agreement, often one, two or three years. That rate doesn’t change, even if wholesale prices go up.

For many businesses, this brings a huge sense of relief.
You can plan. You can budget. You know what’s coming. And there’s no need to second-guess what a cold winter or a supplier issue might do to your bill.

Fixed-rate contracts are especially popular with small and mid-sized businesses. They keep things straightforward. And if you’re already juggling a million other things, that simplicity counts for a lot.

But there are a few things to go in with your eyes open to:

• If market prices fall, your rate stays put.
• You’re committed for the full term, so changing needs or usage won’t affect what you pay.
• If you miss your renewal window, you could roll onto far higher out-of-contract rates without realising.

Fixed isn’t always “cheap”, but it is predictable and that’s often the biggest draw.

Flexible energy contracts give you more control

A flexible energy contract works differently. Instead of locking in your rate upfront, you buy energy in blocks, spreading purchases across your contract period.

The goal?
To manage risk more actively. If prices fall, you can buy at a lower rate. If things spike, you don’t necessarily commit at the worst time. Over time, you aim to smooth out the highs and lows and potentially make savings if the market plays in your favour.

This kind of contract suits businesses that:

• Use a significant amount of energy
• Have seasonal or variable usage
• Want to take a more strategic approach to procurement

But flexibility isn’t a shortcut to lower bills. It needs attention.
Someone, whether in-house or through a partner, has to track the market, interpret data, and make timely purchasing decisions. It also requires trust. You’re putting your energy costs in the hands of whoever’s managing that process.

Done well, it can give you control and a better overall outcome. Done poorly, it can quickly turn into a guessing game.

So, what’s best for your business?

That depends on what matters most to you. Here’s a practical way to think about it: