Are you looking for a new provider of business gas contracts for your company? Shopping for the first time this year? Or just browsing to learn more about your options? Here are a few things you will need to know before choosing your next gas tariff:
How is Business Gas Sold?
There are several differences in the way business gas is provided to commercial customers than the way gas is sold to residential clients. These differences help providers rise to meet the different needs that commercial customers have.
- Tariffs. Just as electricity is sold to UK businesses via contracts called tariffs, so too is business gas distributed through tariffs. These contracts range in length from twelve months to multiple years and can be either fixed in their price per unit or variable. There are benefits and potential drawbacks to each of these types of tariffs, so it is important to discuss these with your energy provider.
- Variation in pricing. The price of gas bills for businesses can vary widely. This comes down to the difference in fixed per-unit prices and variable prices. It also comes down to the length of the contract mentioned previously, as shorter contracts are often more expensive per unit, regardless of other factors.
- Commercial meters. The meters used in measuring gas use for commercial customers are also different from those used in measuring the usage of residential customers. This helps to provide a more accurate reading, which in turn helps to make billing easier and more accurate.
Variety in Energy Contracts
There are several ways business gas can be sold. This comes down to two primary factors: the type of per-unit price, and the length of your contract.
- Fixed-rate tariffs. Fixed rates mean a price per unit that remains the same throughout the length of the tariff. This offers stability that makes budgeting easier, since prices will not change when the market fluctuates. Unfortunately, that means that your company is not entitled to lower rates if market prices fall, but it also protects you from rising rates.
- Flexible-rate tariffs. Flexible rates vary per unit throughout the length of the contract. This means that if rates fall with the market, your company can enjoy lower rates per unit as well. However, it also means that rising rates will be reflected in your company’s energy rates.
Both fixed and flexible rates offer benefits and drawbacks. Some companies appreciate the stability of fixed rates, while others prefer the potential to save when the market dips. Some other factors that can impact pricing include term length.
- Shorter tariffs often last as little as twelve months but may last up to 24 months. These shorter contracts offer more flexibility, as they renew more frequently and can free your company from the current rate more quickly. However, this may also mean that your fixed rate will climb more often.
- Longer tariffs generally last 3-5 years. These may not offer the same flexibility, but they do provide lower rates by spreading the contract across a longer period. This is beneficial for companies that are projected to have stable energy use over several years and are looking to save money on that usage.
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Key Steps for Businesses to Choose the Right Contract
Now that you know more about how gas is sold to businesses in the United Kingdom, it might be a good idea to narrow down the many choices you have for providers. Here are the things you will need to do – from start to finish of the process of purchasing an energy tariff – to ensure you get the best possible service and competitive pricing:
- Analyzing energy use. Begin by conducting an initial assessment or hiring an energy use consultant to conduct analyses of your energy use. This can help you do a variety of things, including identifying inefficiencies, addressing usage concerns, and ensuring that the contract you choose can meet your business’s energy needs.
- Setting goals. What does your company want to achieve through its business gas use? Are you looking to save money, ensure sustainability, or create reliable availability of energy for your company’s use? Each of these requires different contract details, so clearly identifying goals beforehand can help you make the right choice.
- Researching suppliers. There are many ways to research the potential business gas suppliers in your area. These include comparison tools, energy brokers, and even direct negotiations with possible suppliers to find the best available rates and terms.
- Negotiating contracts. Never accept the terms of a contract without discussing them first. There may be room for negotiation, and that negotiation can lead to much better results. Talk about things like terms, pricing, and even the possible flexibility or scalability of your contract for future growth or unforeseen circumstances.
- Monitoring and reviewing. Continuing to monitor and review energy use can help you ensure you are still getting the best possible rates for the service and products you are receiving. You may find that performance or pricing no longer benefits you after a while, and continual monitoring will help you identify these shortcomings in plenty of time to renegotiate or cancel your contract when necessary.
