3 reasons why Covid-19 shouldn't stop you renewing your energy contracts
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Energy contracts: 3 reasons why Covid-19 shouldn’t stop you renewing your energy deal

11/05/2020

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Energy contracts are probably the last thing on your mind right now. But there are three important reasons why you shouldn’t forget to renew your energy deal.

Energy contracts have probably fallen down your priority list. After scrambling to turn your business remote so your staff can work at home, making critical decisions about the furlough scheme, changing your business model and planning for the future, we don’t blame you.

Covid-19 is having a major impact on businesses, and that includes the energy sector. But as dire as things seem, the situation won’t last forever.

3 reasons why you should renew your business energy contract now

1. Energy prices are low right now – so you can lock in a cheaper deal

Lockdown measures introduced to combat Covid-19 have shocked the energy industry in a major way. Oil demand has almost completely collapsed, thanks in part to restrictions on domestic and international travel, as well as major drops in manufacturing output.

In fact, oil demand has dropped so much that in April 2020, US oil prices turned negative for the first time in history, with producers paying buyers to take it off their hands due to concerns about storage capacity. That concern hasn’t gone away; oil producers around the world may have cut their output, but it’s doubtful that those cuts are deep enough to support higher oil prices.

Why is this important to your business? Energy prices often track falls in oil prices. That means energy is cheaper for businesses than it’s been in a while, making it an ideal time to renew your energy contract or switch to a new supplier and deal. In the UK, government levies and taxes make up a big part of your bill, so it’s a good idea to take advantage of falls in the commodity price when you can.

2. Avoid out-of-contract rates

Out-of-contract rates – also known as deemed rates – are what you end up paying when you don’t renew or switch your energy contracts in time. When you don’t renew your energy contract, your supplier will place your business on a standard tariff. These tariffs can be 80 – 100% higher than your contracted rates.

Could your business cope with a 100% jump in the cost of a key overhead like energy? Even at the best of times, most businesses would struggle to absorb that kind of cost increase. In the midst of an unpredictable pandemic, when many businesses are reliant on government support, any change in costs is unsustainable for most.

3. Low energy prices won’t last forever

The current drop in prices have been caused in no small part by the pandemic, but these conditions won’t last forever. Already countries are easing lockdown measures and, with the Bank of England predicting a return to pre-pandemic growth in 2021, demand for energy will increase. That means prices will recover, and your window for savings will be lost.

Renew your energy contract now

Our team are helping businesses save on their energy costs every day, and they can do the same for you. Get in touch on 0808 164 2222 or email fairer@troocost.com to book a callback.

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