Should I Stick or Switch? The Business Energy Contract Conundrum
We appear to have reached a point where retail prices seem to have plateaued over the last few weeks.
The wholesale market although still volatile and open to supply and demand dynamics is far less spikey than 2022 when we witnessed some massive rises in the summer period. This has resulted in a period of relative stability and the market feels like it has reached a new normal.
The word new normal is a phrase that we have all had to get used to since the pandemic but it unfortunately sums up the new retail price level for both business electricity and business gas.
What does the new retail price look like?
If you are approaching the end of you fixed term contract period and need to start shopping around, there is a chance that you could be asked to pay another 40-50% for the same electricity or gas if you are coming out of a 36 month contract.
The difference will be less if you are coming out of a 24 month contract and you could be seeing a saving if you are coming to the end of a 12 month contract or if you are currently sat on out of contract rates.
At the time of writing, the current retail rate for business electricity is between 25-30 p/kWh (unit) and business gas is 7-10 p/kWh (unit). It has bubbled along at this level for the last 6-8 weeks.
If we compare this to prices this time last year (August 2022) we were looking at 60-65 p/kWh for electricity and 15-20 p/kWh for gas, so the price is a lot cheaper. If we compare the rate in 2021, the rate was 19-22 p/kWh for electricity and 4-6 p/kWh for gas.
Will retail prices reduce any further?
This is the question everyone is asking at the moment. The answer is no one really knows.
If we look at past summers, taking 2022 out of the equation, summer always tends to be the best time to agree to a business energy contract based on basic supply and demand dynamics. The less demand the lower the price.
We expect this period of stability to remain for the comings weeks but we don’t expect prices to drop much lower than the current level (if at all) given all of the supply issues we face as a country. Low wind, gas outages from key supply partners and the fight for limited LNG cargoes are the key fundamentals that could affect pricing going forward.
All of these factors have a massive bearing on the wholesale price level, especially when demand picks up as we approach the colder autumn and winter months, which are sadly just around the corner.
What happens if my contract expires in the next 3 – 6 months?
We would strongly advise taking advantage the current level of price stability.
If you still want to stick, we would advise keeping track on the market on a weekly basis. You can do this by checking this page page which is updated every Monday.
You can even subscribe and get the latest price tracker sent to your inbox every Monday morning.