Should I Fix My Energy Price Until 2023?
Over the past 12 months energy prices have skyrocketed as a result of the supply and demand of gas. This soar in energy prices has had a huge impact on both domestic and non-domestic properties, for both individuals and businesses. Everything is currently pointing towards energy prices going up in 2023, although nothing is certain. Fixing your energy prices for 2023 is the best way to reduce the risk of being affected by any potential price hikes, allowing for stable monthly budgeting.
Why is the price of energy going up?
Energy prices are going up due to an accumulation of reasons. As countries began to emerge from the pandemic, there was a demand for energy that could not be met. The shortage of gas has caused wholesale prices to go up, which in turn has led energy suppliers to increase their rates in order to cover the extra costs, resulting in higher energy bills for users. Russia’s invasion of Ukraine further threatened supplies, driving prices up even further, only adding to the impact of energy prices on people and businesses. The UK’s high gas and electricity usage and, and lower storage capacity, has caused it to be hit harder than other nations.
What can I do to fix my business energy rate?
The government recently introduced the Energy Bill Relief Scheme to help business owners with the increasing energy prices. The Energy Bill Relief Scheme is designed to give all businesses a discount on their energy bills for the next six months. This new scheme will fix wholesale electricity prices at £211 per megawatt hour (MWh), and wholesale gas prices at £75 per MWh for six months. One of the main takeaways from the announcement was that it will be working with suppliers to ensure that all businesses can switch to a fixed energy rate while the scheme is in place.
Businesses that are currently on a different type of contract such as deemed or variable, will benefit from being on a fixed rate tariff. Fixing your rates is the only possible way to guarantee you know what you’ll be paying for a certain period.
Is it worth fixing my energy price?
If your business’s fixed tariff is due to expire, and you’re unable to find a cheaper alternative, you will want to avoid being put on a variable tariff. Although there is no guarantee whether prices will increase or decrease in 2023, opting to fix your energy price will provide bill stability and avoid any upcoming hikes.
Pro
You’ll be able to lock in a fixed amount and protect yourself from price hikes, allowing you to take control of your monthly spend and budget. If market conditions are good and you shop around, a fixed-rate tariff will be better value than a variable-rate one.
Con
The con of fixing your energy price is that fixed-rate tariffs are dependent on the conditions of the energy markets, so there is always a chance that energy prices will drop in 2023, which could leave you paying a premium price.
Ultimately the decision to fix your energy price is yours, factoring in the pros and cons of doing so. There are other things to consider that might affect your decision, such as other outgoings for example premises rent, insurance etc, and the overall need for your business.
Troo can not only help provide information and insight that you might need when making decisions that affect your business energy costs, we can also help business owners get fairer priced energy through our broker service.
