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Fixed vs. Variable Rate Energy Contracts: Pros and Cons

By Vikram Singh (14/08/2023)

Switching Business Utility Providers: Businesswoman comparing energy prices on a tablet

The Pros and Cons of Fixed and Variable Rate Contracts for Gas and Electric

Finding the right contract for your business can be hard, it is important to understand the options and make a well-informed decision.

The Pros and Cons of Fixed and Variable Rate Contracts for Gas and Electric

Finding the right contract for your business's gas and electric supply can be challenging. It's crucial to understand the available options and make an informed decision that aligns with your specific needs. At Switch365, we specialize in assisting business customers to secure the best rates for gas and electric. In this guide, we will explore the pros and cons of fixed and variable rate contracts for gas and electric, empowering you to make a well-informed decision that optimises your energy costs.

Pros: Price Stability: With a fixed rate contract, your energy prices remain constant throughout the contract term. This shields your business from market fluctuations, making budgeting and financial planning more predictable.

Long-Term Cost Control: You have a clear understanding of your energy costs, allowing you to allocate resources efficiently and accurately forecast expenses.

Cons: Potentially Higher Initial Costs: Fixed rate contracts may have higher rates compared to variable rate contracts, particularly during periods of low energy prices. However, it's important to evaluate the long-term cost benefits in relation to your business's specific energy consumption patterns.

Variable Rate Contracts: A variable rate contract offers flexibility and the potential for cost savings. Consider the following pros and cons when considering a variable rate contract:

Pros: Market Advantage: Variable rate contracts allow you to take advantage of potential decreases in energy prices when the market is favorable. This can result in significant savings, especially during periods of low energy costs. Short-Term Flexibility: Variable rate contracts offer the flexibility to switch to a different contract or supplier without incurring early termination fees, allowing you to adapt to changing market conditions or business requirements.

Cons: Price Volatility: Energy prices can fluctuate significantly under a variable rate contract, potentially leading to unpredictability in your energy bills. This may make budgeting more challenging, particularly if there are sharp price increases.

Risk of Higher Costs: During periods of high energy prices, variable rate contracts can result in higher costs compared to fixed rate contracts. It's essential to assess your risk tolerance and the energy market trends when considering this option.

Choosing between a fixed rate and a variable rate contract for your business gas and electric supply requires careful consideration. At Switch365, we can help you navigate these options and secure the best rates for your specific needs. Fixed rate contracts provide stability and long-term cost control, while variable rate contracts offer flexibility and potential market advantages. By understanding the pros and cons of each type of contract, you can make an informed decision that aligns with your business goals and optimises your energy costs.

Contact us today to explore the best contract options for your business and take advantage of our expertise in securing competitive rates for gas and electric.

If your business is eligible for the EBDS, you will be able to benefit from reduced costs. However, it is important to note that the overall government funding for this scheme has been drastically reduced compared to the amount that was previously available under the Energy Bill Relief Scheme.

At Switch365, we understand the importance of cost savings for businesses. That's why we not only offer renewable energy solutions but also keep you informed about government schemes like the Energy Bill Discount Scheme. Our knowledgeable team can guide you through the eligibility requirements and help you maximise the benefits for your business. By switching or renewing with our team, we can help you find the most cost-effective deal for your business. With multiple solutions available we can also help businesses offset rising energy costs by making vital savings on their merchant services.