Small businesses are being urged to consider longer term energy contracts, after the cost of business electricity climbed by more than 11% in the past year, according to the Energy Advice Line.
Businesses signed up to one-year energy contracts at the beginning of 2012 have been hardest hit by price rises, its Quarterly Review revealed.
Longer-term contracts could help to protect small businesses from further price hikes, said Julian Morgan, managing director of the price comparison service for business energy consumers.
A year ago, electricity tariffs under a one-year contract cost an average 9.56p/kWh. By the time the contracts expired in the first quarter of 2013, prices had risen to 10.99p/kWh – an increase of almost 15%, he explained.
In contrast, businesses that signed up to three-year deals at the start of 2012 would have paid slightly more for their energy at the start of the contract – 10.58p/kWh. However, these firms will now be paying less than average today and the low tariffs are locked in for a further two years.
“Firms that signed up to the shortest-term deals a year ago would have been financially better off signing up to a more expensive three-year year deal,” Morgan added.
“Businesses would have paid a premium for a three-year contract but because prices have risen so substantially, they are now better off.
“This is not about the benefit of hindsight. These figures illustrate very clearly that it’s well worth considering all available options when looking to sign up to a new energy deal.
“Energy prices are likely to continue to rise so locking in today’s prices is probably a good idea.”
However the tough economic conditions meant that 87% of businesses continued to opt for the cheapest short-term deals, the review found.