Do you roll or deem? What does that even mean?

CLA-Utilities

Every business needs energy. Even if you have invested in your own renewable energy generation, you still need to have a contract with an energy supplier.

What is the most efficient way of doing that? The short answer is to ask CLA Utilities, who will give you free advice as part of your CLA membership.

The slightly longer answer is to make sure you are on the right contract to keep your costs down.

Like a lot of big providers, utility companies like to try to blind us with jargon. Here is an explanation of the names they give various types of contract.

A rolled contract is one that automatically renews at the end of the term. That’s a relief: no need to do anything. Wrong. These are often the most expensive tariffs. They are designed to trap people who are too busy running their business and are therefore not focused on their energy bills. They also typically run for at least a year, so once you’re in, you’re locked in.

Best avoided.

Deemed contracts. That could mean almost anything. They are sometimes called ‘out-of-contract’ but that is rarely used because of its clarity. If your business moves into new premises and starts to use electricity or gas, or both, before agreeing a contract, you will be on a deemed contract.

You will also move to a deemed contract if your existing contract ends without agreement about what happens next.

And guess what? Tariffs on deemed contracts are also very high and so are also best avoided.

It does get better. A variable price plan, sometimes known as a standard variable tariff, could end up being the cheapest. It’s linked, ultimately, to wholesale prices. If the price of oil drops, for example, you’ll get cheaper energy. But if it goes up, clearly the reverse happens. So it’s something of a gamble.

Generally, a variable price plan is more expensive than a fixed-term rate. This is the one you want. You can negotiate a reasonable price and you have the predictability of knowing what the cost will be each month, making your business planning easier.

There is a sting in the tail though. If you don’t take any action when the term ends, your provider will probably shift you to a variable price plan, which you don’t want. The best thing is to negotiate a new deal before your old one comes to an end.

If this all sounds complicated it’s because it is. But so is managing land and running rural businesses. That’s your area of expertise. Why not use our area of expertise to help you keep your energy prices as low as possible?

CLA Utilities is trusted by the CLA to cater for CLA members and your unique needs.

 

Member services blog category: