Electricity pylons with a sunset in the background
Thursday 24th of September 2020 | Posted In: Buy and Sell, Buying energy

What length of electricity contract should I sign up for?

This is a question that we are asked a lot. In today’s market, the 12-month prices tend to be the cheapest but opting for this term length can leave you exposed to higher prices the next year. The three year deals tend to be on the high side but can see you on a very good tariff by the time you get to the third year.

Trying to predict the future electricity prices is not an easy thing to do,  we can only advise on how the market behaved over the life of your current contract and help you to make a decision based on this history. However, the electricity charge is only a portion of your unit rate.

Unit rates are made up of electricity prices and third-party costs. So even if you see the prices coming down, this will not always result in a reduction of the unit rate. The third-party costs are to do with the upkeep of the grid and getting the electricity to your door. They will also include some government legislations such as help for renewable energy projects etc. The recent lockdown has been challenging for the National Grid due to demand dropping off suddenly. This has resulted in a lot more balancing of the power the grid holds, the costs involved in achieving this will filter down to the kWh rate on future contracts.

It is also worth noting that if you renew a contract every year then you are spending time to do this. It may be better for you to sign for a longer period to save that time and the cost attached to it.

We are always here to advise on all the issues with renewing your energy contracts. If you do have a question or would just like to talk to someone regarding your next contract then please call us on 024 7669 8885 and we will be happy to help.