Some business owners think that it’s overwhelming to renew their business energy tariffs every year, so they end up securing their tariff rates for a longer period. This means that your business energy contract can be locked in for an extended period rather than for a short term. If you prefer this type of a business energy contract, then Utility Bidder can help you to secure one. But regardless of what type of business energy contract you decide to choose, you need to note that business energy prices are rising.
Business energy prices
The current UK energy crisis has created shockwaves in businesses and households since the credit crisis which affected the financial services markets as well as the UK economy in 2007. The energy price rises have been unprecedented, and the wholesale cost of electricity and gas has significantly increased. Many domestic customers are now worried about staying warm during the winter months. And, businesses also fear if they can survive with these high energy costs.
To understand these increases in business energy prices, you need to know the differences between electricity and gas. A business electricity bill is made up of commodity and non-commodity costs for cabling, networks, and a variety of green taxes. In recent years, the non-commodity costs have steadily been increasing, and these increases are forecasted to continue.
A gas bill doesn’t have the same non-commodity costs and tends to have fewer green taxes even though it’s a fossil fuel. Hence, fluctuations of your gas bills are directly associated with wholesale costs. Gas prices have been fluctuating in recent years, and prices are currently reaching astronomical levels.
You should note that gas prices have skyrocketed because of the increased demand for gas and shortage of supplies. Unfortunately, this has been growing in intensity over the past couple of months.
On the other hand, electricity prices have been increasing for quite a while, largely because of the non-commodity costs. The electricity prices are now being further affected by the recent significant increase in gas prices.
The relationship between gas and electricity
A large percentage of the UK electricity is produced from renewable gas and most of this comes from other countries that are exposed to global gas prices. You should remember that the UK is performing well when it comes to renewable generation growth, and there have been huge increases in wind and solar-generated power capacity. But this can also fluctuate depending on the weather.
This progress in the country is largely because of the phasing out of coal, which is the most polluting fuel. Instead, coal has been replaced by gas which is a fossil fuel with less polluting effects than coal.
In most cases, the UK relies a lot on burning gas to produce adequate electricity. The significant portion is from nuclear sources. The recent energy crisis has further been enhanced by renewable generation that is below average over the last couple of months, this means that even more has been required to produce electricity.