What kind of fixed contract do you want?
Historically gas and electricity contracts have fallen into two key categories: Fixed or Non-Fixed, aka Pass Through. The key difference being that Fixed contracts offer price certainty, whilst Non-Fixed, aka Pass Through, contracts are subject to price variation. To learn more about these options read here.
As if the choice wasn’t confusing enough, Suppliers are increasingly offering what you could refer to as “Semi-Fixed” offers. i.e. the price is fixed based upon a supplier’s best guess forecast, with the option that the supplier may re-visit prices should their forecast prove to be incorrect.
To illustrate how Corona’s fixed contract products compare see below:
- Standard (Power)
The cost of DUoS, FiT, RO, TNUoS, BSUoS, CfD and CM is included in the price but may be subject to pass-through if costs increase more than what has been included. In addition, any new industry charges/changes are not included in our offers and will be charged on a pass-through basis. All pass-through charges will be charged at the prevailing market rate.
- Standard (Gas)
Price may be subject to pass-through if costs increase more than what has been included. In addition, any new industry charges/changes are not included in our offers and will be charged on a pass-through basis. All pass-through charges will be charged at the prevailing market rate.
- Fully Pass Through
Charges exclude: BSUoS, DUoS, RO, TNUoS, CfD and CM and any new industry charges/changes. Charges include: FiT is incorporated within in the day and night unit rates, but will be subject to pass-through. Any new industry charges/changes are not included in our offers. All pass-through charges will be charged at the prevailing market rate.
- Fixed
The offer provided is fixed for the contract duration, subject to contract T&C. Any new industry charges/changes are not included in the offer and may be charged on a pass-through basis. All pass-through charges will be charged at the prevailing market rate. With regards to electricity contracts pay close attention to T&C pertaining to Renewable Obligation (RO) and Feet In Tariff (FIT). As RO and FIT are changed differently to the other transportation costs it’s more difficult for suppliers to estimate costs. FIT and RO are invoiced retrospectively to suppliers, so the supplier is left guessing what they may be in the future whilst offering fixed contracts. Whilst Corona’s Fixed product does include well costed risk premiums to account for the RO and FIT costs for the lifetime of the contract, Corona do reserve the right to change these costs should something come in way over their estimate. At the time of publishing this blog, to date Corona have not adjusted these charges mid-contract, but they reserve the right to. Many suppliers have similar provisions for FIT and RO in their ‘Fully Fixed’ products whether it’s mentioned in the T&Cs explicitly or not, however Corona like to be as open and transparent as possible for the benefit of the customer.
In Conclusion…
Always read the fine print of the contract or ask your account manager to address any questions you may have before signing.
Re-opening contract prices mid-term takes time, damages reputations, and costs money for a supplier to manage. It is realistic to expect suppliers to only enact a mid-contract price adjustment with the positives outweigh the negatives for them. i.e. when they under-forecast so much that it is worth the burden of altering prices mid-term.
If you are risk averse and want to plan an accurate budget with limited risk, the Fixed Offer is an appropriate option. If you don’t mind gambling a little risk for what at the point of signing the contract are cheaper rates, then the Standard Option is a reasonable option. If you are a larger consumer, and can support price risk tolerance, then the Fully Pass Through Option will be of interest. Our advice is to decide in principle based upon these concepts, as comparing prices is only a guesstimate in advance.
If you have any questions regarding contract types, please do not hesitate to get in contact with Direct Power for some guidance.
