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Flexible vs Fixed Energy Contracts for Business

Fixed means your supplier has pre-bought (hedged) energy so your unit rate stays flat apart from pass-through carve-outs. Flexible leaves chunks of the wholesale stack open so you—or their desk—buys tranches as markets move. Both are legal; they answer different questions about sleep and cash flow.

Next step: If you use under about 50,000 kWh a year, you can get a quote in under 90 seconds online — fast, no obligation. Larger supply, half-hourly metering, or prefer chat? Use the contact page.

Who actually signs flexible deals in the UK?

Food manufacturers above 5 GWh, data centres, universities and any account with dedicated half-hourly analysts commonly run risk-managed procurement. Suppliers such as Drax, Engie UK and npower Business sell frameworks where you approve four to twelve purchases a year, each pegged to N2EX day-ahead prints or broker bilateral strips.

Everyone else—including most high-street chains—is on retail fixes where the supplier internalises hedging but keeps the spread private. Nothing wrong with that; just do not pay flex fees for a dressed-up standard tariff.

Numbers-led example: Coventry metal finisher

They burn 1.8 GWh, half-hourly on Western Power. Option 1: 28.6p fixed 36 months all-in. Option 2: collar 24–31p on 70% of volume with remaining 30% spot-indexed plus £1,800 annual risk management fee. Treasury capped downside at +£11k per year versus fix, accepted upside to +£7k if gas futures softened. The board picked Option 2 after adding a junior analyst—without that seat, they would have stayed fixed.

Decision grid before you sign anything

Clauses that flip “fixed” into “sort of flex”

Material-change wording, pass-through DUoS and BSUoS, or “change in law” riders can all move invoices on nominally fixed deals. Before you celebrate beating the flex quote, read pass-through contracts alongside this page. If more than ~0.5p/kWh is exposed to balancing swings, you are already running a hybrid risk profile.

Treasury teams sometimes insist on International Swaps and Derivatives Association-style credit support for true flex; SMEs rarely sign CSA schedules, so expect personal guarantees or shortened payment terms instead. If that appears, compare the working capital cost against the theoretical wholesale savings—often the fix wins once overdraft interest is modelled.

Gas behaves differently from electricity on flex

NBP-linked gas flex reacts to Norwegian pipe maintenance, LNG send-out at South Hook and storage withdrawals from Rough; power flex layers in carbon and interconnectors. Many manufacturers therefore fix gas for budget calm but leave power partially open if onsite CHP skews their spark spread. There is no universal rule—only a stacked chart that matches your actual MWh and therms.

When both fuels sit with the same counterparty, ask for a net margin cap across MPAN and MPRN so their traders cannot claim conflicting optimisation wins at your expense. File the email reply next to the contract PDF so finance can enforce it if billing drifts.

What finance directors tell their audit committee

IFRS-minded teams want evidence that mark-to-market sleeves are authorised, measured, and disclosed. A flex mandate without minutes is awkward when wholesale curves swing £20/MWh inside a quarter. Even SMEs borrowing against invoice discounting find lenders asking for fixed-price coverage ratios; a partial collar can satisfy both bank covenants and hedge accounting aspirations better than naked spot exposure.

Operationally, assign one owner to archive each tranche confirmation email from Drax, SmartestEnergy Business or whichever desk executes the trade. Treat those PDFs like purchase orders. When a managing partner at a Cheshire law firm skipped that discipline, their Q3 flex invoice could not be reconciled to ICE prints in time for the year-end pack—external auditors flagged it as a control weakness even though cash was only £4k out.

When a “fixed” corporate PPA is still flex in disguise

Onsite solar sleeves and sleeved PPAs sometimes embed formula-based tranches that track captured generation forecasts. That is flexibility tied to weather, not screen prices. Before you class the deal as boring fixed spend, stress-test rainy summers and inverter outages; the residual grid top-up behaves like a mini spot book. Facilities and procurement should review those assumptions together, not as rival silos blaming each other after a dull July.

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