Home > News > Fixing your energy now could break your bank

Continuing to purchase energy in the same way you always have could cause you some serious financial damage in the coming months and years.

How would you feel about a 5000% increase in your standing charges? A quadrupling of your capacity charges? These types of increases are happening in the market right now and you will get hit by them if you don’t make changes.

So, why are we seeing these seemingly crazy increases in charges for fixed term energy contracts and how can you avoid them?

The latest event to cause problems in the energy markets, particularly as far as pricing for fixed contracts goes, is the result of OFGEM’s Targeted Charging Review (TCR).

Whilst this was no doubt conducted with all best intentions and indeed will likely achieve its goal of creating a more even and equitable spread of grid-maintenance costs, it has without question created a tidal wave of uncertainty within suppliers, causing prices to rocket.

These days the price you end up paying on your energy bill is likely only around 50% based on the actual wholesale cost of the energy itself (it could be significantly less) with the rest composed of a variety of non-commodity costs.  A portion of these non-commodity costs are there to cover the costs of providing access to the UK electricity grid network and it’s these costs which are affected by the TCR.

Currently, suppliers know that these costs are all going to change and they’ll need to pass these changes on to consumers.  What they don’t know is the level of these changes.   Therefore, they’re estimating the impact with a healthy risk margin (if they’ve got any sense they are anyway). So, if you’re going for a fixed contract any time soon, you’ll have these costs, loaded with risk, integrated into your charges in one way or another.

There is an alternative though… a partial passthrough contract will remove all of the risk from the supplier and you, giving you peace of mind that you won’t be subject to unnecessary speculative risk charges.  Ensuring you’re getting the best value energy deal for you.

Don’t know what a passthrough contract is or how best to compare offers from different suppliers to ensure the best deal for you? Get in contact with Harvest Green and we’ll be happy to help.