Over the past year, the energy crisis has severely affected the fixed tariffs available to businesses.
Business owners typically opt for the security of a fixed business energy tariff as it provides certainty over future utilities bills. Unfortunately, anyone looking for fixed energy tariffs over the last year has faced their bills going up as much as 500 per cent.
The war in Ukraine and Russia’s decision to reduce natural gas supplies to Europe has resulted in huge volatility in wholesale energy prices. The volatility of prices meant that business energy suppliers have been reluctant to offer cheap fixed tariffs.
Happily, over the last month, wholesale energy prices have gradually eased to something like normality. Business electricity and business gas suppliers are now offering cheap two and three-year tariffs as prices are expected to fall further.
Fixed business energy tariffs offer several benefits to businesses, including:
1. Predictable costs: One of the main benefits of fixed business energy tariffs is that businesses can budget more effectively, as they know exactly how much they will pay for their energy over the fixed term. This helps companies avoid unexpected price increases, which can significantly impact their cash flow.
2. Protection from price increases: With a fixed business energy tariff, businesses are protected from price increases during the fixed term, even if the wholesale price of energy goes up. This can be particularly important for businesses that operate in volatile markets or have limited cash reserves.
3. Budgeting flexibility: Fixed business energy tariffs allow businesses to plan their finances more effectively, as they can set their energy costs in stone and plan their budgets accordingly. This helps businesses to manage their cash flow and avoid sudden increases in their energy bills.
4. Environmental benefits: Many energy suppliers now offer fixed tariffs sourced from renewable energy, which can help businesses to reduce their carbon footprint and meet their sustainability goals. This can be particularly important for businesses that operate in industries with high environmental impact.
Overall, fixed business energy tariffs provide businesses with greater price stability, predictability, and flexibility, which can help them to manage their finances more effectively and reduce their risk exposure. However, companies must compare tariffs from multiple suppliers to ensure they get the best deal for their specific needs.
