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The Benefits of Fixed-Rate Business Electricity Plans in 2024

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The Benefits of Fixed-Rate Business Electricity Plans in 2024

Businesses are always looking for ways to manage their energy costs. One of the biggest in 2024 is fixed-rate electricity plans. These plans offer many benefits to help businesses keep their energy costs stable and predictable. Here’s a quick and easy look at why fixed-rate business electricity plans might be the best for your business this year.

Price Certainty

Fixed Energy Prices

One of the biggest benefits of fixed-rate plans is price certainty. With a fixed-rate plan, the price per kilowatt-hour (kWh)  stays the same for the entire contract term. So businesses can budget their energy costs with confidence, no ups and downs like variable-rate plans where prices can change with the market​.

Price stability helps businesses plan better. During extreme weather energy prices can skyrocket, but a fixed-rate plan shields businesses from those price hikes​.

Protection from Market Fluctuations

Fixed-rate plans protect businesses from market changes. Seasonal demand, political events and new energy rules can cause big price changes. By locking in a rate businesses avoid price shocks and their costs stay steady no matter what happens in the market​.

This is very important for industries where energy is a big part of their expenses. Stable costs means businesses don’t have to raise their prices suddenly and keep their customers happy​.

Better Budgeting and Financial Planning

Budgeting Made Easy

Fixed-rate plans make budgeting easier for businesses. With stable energy costs, businesses can forecast their expenses and allocate money to other areas of the business without worrying about unexpected electricity bills. This is especially helpful for small to medium sized businesses with limited budgets.

Accurate budgeting helps businesses make better financial decisions. They can invest in growth with confidence knowing their energy costs are fixed which reduces financial risk and overall financial health.

Long term Financial Security

For businesses planning long term finances, fixed-rate plans offer security and comfort. Knowing energy costs will be the same for the term of the contract allows for better long term planning and avoids financial strain from changing energy prices​.

Long term contracts also protect against inflation. As prices rise having a fixed energy cost is a big advantage. This is especially helpful for businesses with long projects or those in industries with long sales cycles​.

 

Flexible Contract Options

Contract Lengths

Fixed rate plans have different contract lengths, 12 to 36 months. This gives businesses the ability to choose a term that suits their operational needs and financial strategy. Short term contracts might be good for businesses that think prices will drop and longer contracts offer more price security.

Choosing the right contract length depends on market forecasts and the business’s financial outlook. For example, a business that’s growing might choose a shorter contract to reassess their energy needs after growth, a stable business might choose a longer contract for fixed costs.

Avoiding Early Termination Fees

Fixed rate contracts often have fees for breaking them, but with some planning businesses can avoid these costs. By choosing the right contract length and aligning it with their business plans, businesses can have fixed rates without extra fees for early termination.

Understanding the contract terms can also help businesses plan better. Some providers offer flexible terms or lower penalties, which can be negotiated during the contract set up.

Managing Risks

Reducing Risk Exposure

Fixed rate plans reduce a business’s risk exposure to energy price changes. This is key for businesses that need fixed costs. By choosing fixed rate plans businesses avoid the financial risk of price volatility.

This is especially important for businesses with thin margins or in competitive markets. Fixed costs give you an advantage, so you can focus on other risks without worrying about energy price changes.

Focus on Core Activities

With fixed energy costs, you can focus on your core activities instead of monitoring the energy market and adjusting to price changes. This will increase productivity and efficiency and overall performance.

The time saved not having to constantly watch energy prices can be used for strategic initiatives that drive growth. This could be developing new products, improving customer service or expanding into new markets.

Competitive Advantage

Fixed Overheads

For businesses in competitive markets keeping overheads fixed is key. Fixed rate electricity plans help businesses avoid sudden increases in energy costs so they can keep their operating costs stable and offer competitive pricing for their products or services.

This consistency helps businesses plan better. Knowing energy costs won’t change allows businesses to set long term pricing strategies and maintain stable profit margins, which is key to staying competitive.

Better Financial Stability

Financial stability from fixed rate plans can improve a business’s creditworthiness and attractiveness to investors. Predictable expenses are viewed favourably by stakeholders, which leads to growth opportunities and better financial health.

Better financial performance means better terms when borrowing for growth projects or other investments. Investors and lenders like businesses with steady cash flows and fixed expenses.

 

Supporting Sustainability

Budgeting for Green Projects

Companies that are committed to sustainability can benefit from fixed rate plans by budgeting better for green projects. Knowing your energy costs in advance allows you to fund sustainable projects and energy efficiency upgrades without financial uncertainty.

For example, you can invest in renewable energy sources like solar panels knowing your energy budget won’t be affected by market fluctuations. This supports your environmental goals and can lead to long term savings.

Promoting Renewable Energy

Many fixed rate plans offer options to include renewable energy. By choosing these plans you can support sustainability and get the benefits of fixed rate pricing.

Choosing renewable energy options can also enhance your company’s brand and attract customers and clients who value sustainability. This can open up new markets and opportunities, further supporting business growth.

Conclusion

In 2024, fixed rate business electricity plans have many benefits so it’s a great choice for companies looking to stabilize their energy costs and improve their financial planning. From price stability and budgeting to risk management and competitive advantage, these plans have a lot of advantages over variable rate plans.

By choosing a fixed rate electricity plan you can have more financial security, focus on your core business and support sustainability all while navigating today’s complex energy market. So, choose wisely and choose the right fixed rate plan for your business and your goals. Small or large, fixed rate electricity plans will get you there in 2024 and beyond.