BUSINESS ELECTRICITY: 1-YEAR CONTRACT OR LONGER?

bkmla

In terms of business electricity rate volatility, what length of fixed price contract is wisest?

The dilema is this: if I go for a 2-year fixed price contract at present rates, in a year rates might be substantially lower and I'm tied in for another year.

On the other hand, the opposite might happen: I could go for a 1-year contract and in a year the rates are substantially higher.

Does anyone know what the 'experts' predict in relation to energy prices over the next few years; are they predicted to rise or fall?

QrizB

bkmla said:

Does anyone know what the 'experts' predict in relation to energy prices over the next few years; are they predicted to rise or fall?

BEIS expect long-term average prices to be around 15-16p/kWh for electricity, and 3-4p/kWh for gas. That's based on the cost of generation / extraction and assumes that supply asnd demand balance one another out.

However they have no way of predicting the sort of short-term (1-2 year) disruption that the market is seeing right now.

Here's a chart of actual wholesale electricity prices for recent years (sorry about the poor choice of colours). You can see where the trend has been, but that short-term it's almost always been well off the trendline:

Robin9

Hindsight is always wonderful.

November 2019 I was offered 1, 2 and 3 year terms. I opted for 1 year - come the start of this year I was to regret that.