The way in which gas and electricity prices are structured, leads to different suppliers having different structures of deals.

Why aren’t all business energy quotes the same?

If we compare electricity and gas to the car insurance sector, you wouldn’t only look at the price of the insurance quote to determine the best deal. You’d also look at the excess, mileage covered, whether it’s third party or comprehensive, amongst many other factors.

Electricity in particular should be viewed in the same way. Just looking at the quotation in terms of cost could be an expensive mistake for businesses, because other charges or contract clauses might be extremely costly later down the line.

How different can business energy quotes really be?

Assuming all electricity and gas quotes can be compared like-for-like has been an expensive lesson for some customers.

Unfortunately some energy brokers have presented offers to customers that, on the face of it, look very competitive, and it’s the assumption that all quotes are the same which has been very costly.

However, those offers might not include certain charges which will be billed on top of the costs shown on the contract.

Electricity charges are made up from around 20 different underlying costs. You won’t necessarily see all these separate costs on a fully fixed, fully inclusive basis – because it’s made simpler for you. After all, it’s a lot easier for you see a single pence per kilowatt hour rate on your bill, rather than 20 different costs which you might not be familiar with.

There is also the cost of electricity itself. You might think that an electricity quotation from a supplier or broker surely must include the actual wholesale electricity itself, right? Well no, actually it might not.

We have seen numerous contracts being presented by brokers that show a very competitive unit rate compared to any other deal we, or the customer have obtained. However the electricity itself was excluded, to be secured (and charged for) separately.

In one example, a customer was presented with what looked like a fantastic deal compared to what else could be found. However the deal didn’t include around £400,000 of actual electricity. Small wonder why the deal looked so good.

The most common structures in which suppliers quote are:

Fully fixed and inclusive – costs are absolutely fixed and include all elements

Fixed at forecast – the costs are fixed at what the supplier currently thinks the underlying charges will be. But if they vary outside of that prediction, they might pass on costs to you.

Pass-through – the quote will likely include the energy itself, but many (or all) of the non-commodity costs are likely to be excluded.

Flexible – the energy itself won’t be included in the contract offer, and some (or all) non-commodity costs might also be excluded, to be charged at their prevailing rates separately.

So for example, it would be impossible to fairly compare a Fully Fixed and Inclusive offer to a pass-through offer – yet many customers have been caught out by trying to do so. Causing them headaches later when their bill arrives with numerous other charges they weren’t expecting.

Do suppliers all have the same contract terms?

Absolutely not. Different suppliers can have significantly different terms.

Thinking back to the car insurance example – it’s sometimes like comparing third party to fully comprehensive.

The key is to use a consultant (like CostAdvice) that can competently inform you of the differences, so you can make an informed decision.

If you ever feel pressured into signing a deal, or it sounds like the broker is particularly eager to push a certain supplier, ask yourself why they might be so eager to secure that deal. Is it a good deal for you, or a good deal for the broker?

Some key terms to look out for might be payment terms, consumption restrictions, or the ability to vary prices (i.e. how ‘fixed’ the prices actually are).

How can I compare deals fairly?

If you’re confused at all about comparing deals fairly, or unsure about a deal that’s been presented to you, we’d highly recommend contacting us to discuss further BEFORE signing.

Once you’ve signed a commercial gas or electricity contract, they can be extremely difficult to revoke. So the message here is that if you are unsure about a deal – do NOT sign it.

Also, if you do have some concerns that the deal which is being presented to you is too good to be true – then the old adage of ‘if it sounds to good to be true, it usually is’ absolutely resonates here.

We’ve seen many cases where customers have been sold an energy deal with a new supplier which turns out to be much worse than what their current supplier was offering in the first place.

You can trust us to give you honest advice

We’ve been helping customers a long time, since 1995 in fact.

If you would like us to take a look at the deal you’ve been presented, and check if it’s competitive, then just ask – it’s really no problem.

Just get in contact with our friendly team, and we’ll be happy to help.