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Energy Advice Line Quarterly Price Review
Business energy users should consider two or three-year fixed-term deals following new figures released by the Energy Advice Line showing the relative cost of short and long-term contracts is narrowing.
Firms that lock in the price they pay for energy for two or three-years or more are now paying a smaller premium than they did at the same time last year.
According to Julian Morgan, managing director of the price comparison, switching and advice service for energy consumers, longer-term contracts are now a more viable option than ever for firms as protection against price fluctuations in a volatile market.
The Energy Advice Line's Second Quarterly Review of energy prices shows that firms that signed up to two-year deals in the second quarter of 2013 paid 11.42p/kWh - 1.37p/kWh more than they would have under a one-year contract at the time. For those who signed up to a three-year deal, the difference amounted 1.28p/kWh
However, the new figures show that the difference between the cost of energy under two and three-year deals compared to under one-year contracts has now fallen to 0.24p/kWh and 0.58p/kWh respectively in the second quarter of 2014.
"This is great news for businesses that value the security of locking in their energy prices," Mr Morgan said.
"As the price premium usually associated with long-term contracts continues to narrow, business are taking advantage and opting for longer options.
"If you are coming out of a fixed term contract or moving into new premises in the next three or four months, my advice is to take advantage of lower retail prices and very much consider the longer-term options."
The survey found that the cost of business electricity had fallen since the first quarter of 2014, from 11.84 to 11.53p/kWh. However, the general upward pricing trend continued, with electricity costs in the second quarter of 2014 up by 1.69p/kWh - or 16% - on the same period in 2012.
As prices continue their overall upward spiral, more business owners or decision makers were opting for the security and peace of mind of longer contracts, according to the findings.
In the first quarter of 2014, 18% of firms signed up for energy contracts of 36 months or longer. However, by the second quarter, 33% of firms were taking a longer-term view.
"More and more customers are seeing the longer-term prices as a much more viable option for their business. It really is worth considering," Mr Morgan said.
The Energy Advice Line is the UK's leading energy price comparison and switching service exclusively for business, and enables firms to compare the market for the best possible business energy deals within minutes.
The free service is backed by a team of business energy experts who provide a complete contract management service including advice about business energy contracts, how to avoid expensive rollover contracts and a renewal reminder service.
The Energy Advice Line also campaigns for a better deal for business energy users from suppliers and has lobbied the government and energy regulator OFGEM for greater protection from practices such as cold calling.
To access the Energy Advice Line's latest price review video, click here
For further information visit Energy Advice Line