Fixed or flexible: which contract type fits your business?

Every energy contract eventually comes down to one fork in the road: do you fix your price for the whole term, or stay flexible and move with the market? It is the single biggest decision in any renewal, and there is no universally right answer — only the answer that fits your business. Here is how to work out which side you belong on.

The two choices, plainly

A fixed contract locks a single unit rate for the length of the term. Whatever the market does afterwards, your rate does not change. You know exactly what a unit of energy will cost you in month one and month thirty-six.

A flexible contract lets your price track the wholesale market, either continuously or by buying your energy in tranches over time rather than all at once. Your rate can fall when the market falls — and rise when it rises.

The trade-off in one sentence

Fixed buys certainty; flexible buys the chance of a lower price at the risk of a higher one. Everything else is detail.

When fixed makes sense

For most mid-market businesses, most of the time, fixed is the sensible default. It suits you if:

• Budget certainty matters more than chasing the last few percent. If a price rise would genuinely hurt, certainty is worth paying for.

• You do not have the time or reporting to manage a live position. Flexible contracts need watching. If no one owns that job, the flexibility works against you.

• You run one site or a handful. The savings from active flexible management scale with volume; below a certain size they rarely justify the effort.

Fixed is not the timid choice. Run well — benchmarked against the market and struck at the right moment — a fixed contract is simply certainty bought at a good price.

When flexible earns its keep

Flexible rewards businesses that can put in the work. It suits you if:

• Your spend is large and price-sensitive. The bigger the volume, the more a few percent of movement is worth chasing.

• You have the reporting and the appetite to act. Flexibility is only an advantage if someone is watching the market and empowered to move.

• Your budget can absorb movement. If a rising market would not derail your year, you can afford to ride out the dips and troughs to capture the lows.

The questions that actually decide it

Strip away the sales talk and the choice comes down to four honest questions:

1. How much price movement can your budget absorb in a bad year? If the answer is "very little", lean fixed.

2. Do you have the reporting — and the mandate — to act on a flexible position? If not, flexibility is a liability, not a benefit.

3. When does your contract actually end, and what is the notice window? This shapes your options more than most people realise.

4. Who is watching the market on your behalf? If the honest answer is "no one", fixed protects you from your own inattention.

A middle path most people miss

The choice is not always binary. You can fix early with agreed tolerances — getting tender-ready long before your renewal, then striking a fixed price the moment the market gives you a good number. You get the certainty of fixed without being forced to buy on a bad day. For larger buyers, phased or tranche buying blends the two: some volume locked, some left to the market.

The point is that the right structure is designed around your risk appetite — not pulled off a shelf.

The mistake to avoid

The worst outcome is not choosing fixed or flexible. It is choosing neither on purpose — letting the contract roll, or signing whatever the renewal letter offers under deadline pressure. That is a decision by default, made at the worst possible moment, and it is the one thing a little preparation always beats.

What to do next

Before you can choose well, you need to know your real position. Benchmark your current contract against the live market, map your appetite for risk, and the right structure usually becomes obvious. A recent bill and a 10-minute call are enough for us to talk it through and show you, in writing, what each path would mean for you — with a fixed, visible fee and nothing added to your rate.