Tuesday 18th of June 2019 | Posted In: Buy and Sell, Buying energy

What affects energy market prices over time

We always do our best to give advice about what changes may affect prices over time, to allow you to make informed decisions when arranging your energy contracts. Here I’ll go through some of the common topics we’ve been discussing with our customers recently.

Do supplier price caps affect me?

I’m sure that many of you will have seen that many of the larger suppliers have introduced energy price caps on their Standard Variable Tariffs. Quite simply this means that if you fail to apply a new fixed contract at the end of your variable agreement, you will find that the variable rates you are moved onto will be lower than previous year’s prices. Although this appears to be positive, there are some negatives which have come from this:

  • Fewer consumers may be inclined to switch feeling that the difference between the fixed rates and the variable rates are not substantial enough to justify a change of supplier.
  • Variable Price Increases mean that your prices can fluctuate still throughout the contract whereas, with a fixed contract, you know what you will be paying and can budget accordingly.

We only work with fixed term contracts as we believe it’s better to know what you will be paying in the long run and to get better rates each time you renew by being happy to move supplier for a better price.

I’m being offered good rates by a small supplier, but are they at risk of folding?

Taking the price cap into consideration alongside other competitive pressures, it is unlikely that we have seen the end of the smaller energy suppliers collapsing. Although it is unlikely that any of the big six will fold, there have been some which have issued profit warnings and there could be job losses and service cuts as they attempt to streamline operations. We often see smaller suppliers offering very low prices when they’re starting out however, the good times often don’t last.

  • Cheap prices often mean they haven’t accounted correctly for third party costs which means either you, the customer, will have these added onto your rates mid-contract or if the bill from the third party is too great for the supplier to afford and they fold.
  • Low prices mean low cost to service which is fine when the going is good but when you’ve got a problem that needs fixing, the customer service team may not have the time or expertise to resolve it. These issues often leave the suppliers receiving fines or embargos stopping them from taking on new supplies which can sometimes leave them in financial difficulty.

Give the Contracts Team a call on 024 7669 8885 so we can help you to seek out the best option for you and your business.