Fixed vs Flexible Energy Contracts
In the current volatile energy market, it can be difficult to determine the best type of energy contract for your organisation. This blog piece will provide an overview of fixed and flexible contracts and discuss the benefits and drawbacks of each to help you decide on the most suitable contract option.
Fixed Contacts
With a fixed contract, the price on the day that you sign is locked in for the duration of your contract. This allows you to have budget certainty, meaning that your price will remain the same regardless of any changes in the market. This may suit your organisation if you are confident that you are signing the contract at the right time.
Pros
- Easier budgeting/ ‘hands off’ approach.
- Less time managing budgets.
- Protection from spikes in the market and rising energy prices.
- Security and consistency.
Cons
- Risk of overpaying for your supply if prices drop.
- Can be difficult if your energy requirements change significantly from season to season.
- This strategy is only beneficial when prices are steadily increasing.
- Less freedom and control.
Flexible Contracts
A flexible contract allows you to purchase your energy at different times throughout your contract term to take advantage of downturns in the market. This may suit your organisation if you require a large amount of energy. However, Dukefield energy have contracts available to make flexible contracts suitable for smaller energy requirements also.
Pros
- Greater freedom and control.
- Spread the risks of purchasing decisions over a period of time.
- Take advantage of wholesale price movements.
- Non-energy charges are clearly itemised on bills.
- Allow for more functionality than fixed contracts.
- Will suit large energy contracts.
Cons
- Can be uncertain when the market is very volatile.
- Budgeting can be more difficult and require more effort and time.
- Usually requires a more active approach.
Our Offerings
Fixed Contracts
We offer two types of fixed contracts. Fully Fixed means that both energy and third-party costs are fixed for the duration of the contract. Alternatively, our Energy Only option allows energy costs to be fixed and all other non-energy costs are passed through to the customer at cost. These costs will vary throughout your contract term and be itemised on your bill.
Flexible Contracts
We also offer two types of flexible contracts, our Fully Flexible Standalone contract allows for energy to be purchased in tranches throughout the contract term directly off the wholesale market. Our Flexible Basket contract is beneficial for organisations that would not use enough energy to purchase directly off the wholesale market (usually less than 4GWH per annum). This allows customers to combine their purchasing with other similar organisations to take advantage of economies of scale. Generally, flexible contracts will incorporate pass-through of non-energy charges however in certain cases they can be fixed.
Risk Management
Dukefield energy can fully manage flexible energy contracts allowing you to have freedom and control of your energy contract without you needing to take an active approach. Prior to beginning your contract, we work through and agree on a risk management strategy and putting upper spending caps in place. This strategy can then be reviewed and altered should the situation change during the contract.
If you need anymore information or your contract is due for renewal in April, contact us as soon as possible so we can discuss your options:
0345 4022 461