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14 Aug

How has Brexit affected business energy prices?

by Simon Thompson
 

We have been looking into this as a small energy business based in Manchester. After the shock result of a vote to leave there was an initial spike in  business energy prices, and then a return back to stability after a few days. Here we look into on how BREXIT could affect your energy prices.

One of the knock-on effects of the ‘Brexit’ vote to leave the European Union is that energy prices may increase over the coming months with some industry experts believing the rise will be substantial.

For businesses of all sizes the added burden of higher energy costs will have a direct impact on profitability and while the UK saw the lowest energy prices for 14 years earlier this year they have grown steadily since then.

More worryingly, in the weeks before the referendum took place, energy prices began to rise more quickly which illustrates how unsure of the energy market is of a Brexit.

There are also issues over future potential investment in the UK’s energy market which will also have a potential impact on costs to consumers.

Business Energy Prices will begin to rise for a number of reasons

Businesses need to appreciate that their energy costs will begin to rise for a number of reasons and the most important being that importation costs will rise because these account for a big part of the unit charge for energy.

With the rise in transportation costs, there’s no doubt that suppliers will have to increase their fixed rate deals to help cover this rise in costs.

The next most important issue is the fall of sterling against the dollar which has a big impact on the price fluctuations of energy being bought – essentially, as the pound falls, energy such as oil and gas becomes more expensive as a result.

And these are issues before we even reach the potential problems of a bad winter because being part of the European Union allows us access to extra storage and supplies in other member countries which gives the UK a security of its supply.

 

Energy suppliers will need to be more reactive

 

Without this security, energy suppliers will need to be more reactive and also expect to pay what could be a hefty premium for importing energy from countries outside of the EU when demand for it rises among customers.

The energy sector is still in a state of flux but businesses need to appreciate also that the energy market supplying the business sector is more reactive and so it will feel any price changes sooner than the domestic energy market.

Because of these questions and potentially expensive scenarios, businesses should begin looking at fixing their energy bills, particularly if they are now in their renewal window to see what rates are currently being offered by suppliers before, as many in the sector widely predict, prices will rise.

By how much they will rise, no-one quite knows just as they don’t know what the economic impact of Brexit will be but by planning and preparing now for the worst, businesses can protect themselves and enjoy lower energy costs while their competitors and rivals are hit with higher energy bills which will, inevitably, effect their profitability and performance.

Contact the business energy experts at D-ENERGi to find out how your firm can protect its energy bills from rising to unsustainable levels in the coming weeks and months with a free consultation.