Considering Letting Your Business’s Utility Contract Expire? Think Again

25 June 2024

Is your current utility contract about to expire? Are you tempted to leave it until the last minute and see what the market has to offer? This could be a high-risk strategy for your business according to Total Utilities’ Director, Chris Hargreaves.

Chris explains, “Allowing your utility contract to expire or putting off securing a new contract until the last minute is not generally advisable, and can leave your business exposed to unnecessary risks and higher costs.”

The Risks of Waiting Too Long
“Waiting too long can lead to significantly higher utility pricing. Electricity prices are extremely volatile due to short-term issues such as hydro storage, so timing the negotiation of your contract plays a key role in the price that you get.

“Delaying until the last minute can leave you with fewer options and less favourable terms,” warns Chris.
“By acting early, you give yourself the best chance to negotiate terms that are advantageous for your business and to avoid any disruptions in service or unexpected cost increases.

“Waste contracts, in particular, are often very one-sided in favour of the supplier. If notice is not given within the applicable timeframes, rollover clauses could lock you into a new term with unfavourable conditions,” he adds.

Strategic planning and expert advice can help ensure you make the most informed decision for your utility procurement.

“I would suggest customers look at pricing around six months prior to their contract end date. That way, if a good offer is made, you can accept it. If not, you have time to review the market again before your contract ends. At the very least you will get a view on where prices are at, allowing you to budget accordingly,” explains Chris.

Choosing the Optimal Contract Term
The optimal term for your electricity, natural gas, LPG, and trade waste supply agreements depend on various factors, including market conditions and your business objectives.

“Longer-term contracts can provide price stability and potentially lower rates, while shorter-term agreements offer flexibility and the ability to adapt to changing market dynamics. However, these often come with higher costs and more risk that if market conditions don’t improve, you could pay more again in one or two years.”

Total Utilities procures a range of contract terms from suppliers and provides recommendations that weigh up short contract terms and long term price security with current market realities. Our goal is to ensure your utility contracts align with your business strategy and market conditions.

Shop Around
In addition to acting early, shopping around and comparing different offers is essential. “The utility market is competitive, and prices can vary significantly between providers,” Chris explains.

“By comparing offers, you can keep your current supplier honest and evaluate how their renewal offer stacks up in the market. At Total Utilities, we help our clients navigate this process to ensure they secure the most favourable deals.”

Proactive Procurement is Crucial
Total Utilities provides bundled procurement services with utility cost, consumption and carbon reporting. Even if you are currently in a fixed-term contract, becoming a Utility Insights client allows us to strike when opportunities arise in the market.

Total Utilities can assist you with:
– Proactive procurement: Timing is everything, and acting fast can mean better pricing.
– Identifying areas for potential savings: Regular tracking can reveal inefficiencies & opportunities for cost reduction.
– Predicting future utility needs: Accurate data helps in forecasting and planning.
– Improving operational processes: Reducing overhead expenses through better utility management.
– Preventing wastage: Avoid excessive utility usage.
– Establishing valuable metrics: Communicate utility usage effectively throughout your organisation.
– Making informed business decisions: Precise reporting supports strategic planning.

“Tracking these costs is not just about current savings but also about preparing for future needs and improving overall operational efficiency,” notes Chris.

Why Choose Total Utilities?
Total Utilities specialises in energy, gas, and waste procurement, leveraging over two decades of experience.
“We complete around 300 market reviews each year, closely monitoring market movements, government policies, and industry trends. This expertise allows us to provide informed and strategic advice tailored to your business needs,” says Chris.

“Our services are designed to help businesses like yours optimise their utility costs while ensuring reliable and efficient procurement. From contract negotiation to ongoing cost management, we offer comprehensive support,” he adds.

Find out more
– For personalised advice on your utility contracts or to explore our comprehensive utility management services, contact Total Utilities today.

– Check out our expert procurement services in our Utility Insights brochure.