In short, it depends who is asking.
Large business customer looking for a new contract? Absolutely not.
Domestic customer exploring their contract options? Maybe… But not for the reasons you may think.
Don’t worry, we will explain all in this article. First, it may be a good idea to provide a little bit of background information on what these contracts types are.
Dual Fuel – double the savings?
Dual fuel contracts as a concept are much simpler to understand than flexible contracts, and as such, we will spend only a brief moment covering the background to how they work and operate.
Most energy suppliers will offer more than one energy type as part of their product line-up. For customers looking to procure both electricity and gas for their property, it is often a lengthy and boring process to search and find the cheapest supplier for each of these energy types. Following on from this is then the added frustration of dealing with different suppliers, different invoices, and generally double the time spent on handling utilities. If only there was a better way of doing things…
Enter the dual-fuel contract.
Some energy suppliers will offer a small discount if customers are supplied with gas and electricity from the same company. The main selling point for consumers isn’t the small (it really is quite insignificant) saving, but rather just having one monthly bill covering everything.
The Biggest Red Flag
Now, we have already covered the basics of what these two contract types are and how they operate – but as always in the energy industry, this is just the tip of the iceberg.
When searching for a new energy contract it is not unusual to make contact with a broker, either directly or indirectly. Sometimes brokers will reach out to potential customers first to try and entice them into working with them. There is nothing inherently wrong with this – brokers fill a huge gap in the market and most brokers bring an invaluable service into the UK economy.
There are some brokers out there that exploit some lesser-known loopholes to part customers with their cash, often utilising unscrupulous methods. Due to the minimal barriers to entry into the industry and how little the broker commission side of things is regulated, there are some ‘get rich quick’ energy brokers out there that tarnish the reputation of the industry.
So, what does this have to do with dual fuel contracts?
If you are a commercial/business energy customer, and you have an energy broker approach you with a dual-fuel contract opportunity – run for the hills. As far away as possible from that broker, ideally.
Because they do not exist for commercial properties. Although you may be able to potentially secure both a gas supply and electrical supply from the same supplier, you will not be able to combine them in the same way a domestic dual-fuel customer would.
As such, you can then draw one of two conclusions about the broker that offered you this ‘most exclusive’ (literally) of deals.
- The broker simply doesn’t know what they are talking about and is entirely unaware of their gaff.
- The broker knows what they are talking about, and is lying in order to obtain a favourable outcome for themselves.
Both of these don’t exactly spell out a happy ending for the customer…
If you hear of this, or have it happen to you – avoid, avoid, avoid.
Special tariffs, or just nicely parcelled?
Often the appeal of dual fuel contracts is a combination of exclusive prices and complete peace of mind.
But only one of these is really true.
It is absolutely true that dual fuel tariffs can save a huge bunch of time and hassle as all of your energy dealings are in one place, one quote, and one point of contact.
But it is absolutely not true that you gain access to special rates by virtue of being a dual fuel contract owner. The rates you are offered are in dual contracts are most likely the exact same rates as those offered for the individual supply of those utilities.
There may be some savings offered, but these are few and far between, and often not very much at all.
It all really boils down to how valuable is your peace of mind? If place a premium on your relaxation time, a dual fuel contract that cuts down on hassle may be the option for you…
Flexible contracts – no real price?
Flexible contracts are a new(ish) contract type that helps to pass on the benefits of the wholesale energy market to consumers, the price they pay for their energy being dependant on movements in wholesale price.
The profile shape of the customer’s demand (consumption) trend is split into two separate categories. These are the baseload and peak. The baseload can be thought of as the bulk of demand and is the predictable portion of the customer’s energy. Most businesses will be able to provide pretty accurate estimations as they have access to much more detailed levels of data. This is usually through combinations of smart meters, sub-meters, and even auditing.
The peak is essentially the spike in demand outside of predictable baseload. The stuff that nobody foresaw needing. This peak demand makes up the tradeable volume that is able to be traded within flexible contracts.
The wholesale market trades this volume in set blocks, although the match-up between the block and customer profile may not entirely match. As a result of this – customers are able to buy a block of energy that may or may not exceed their total usage. There are actions to resolve any mismatches of demand and purchased volume.
Where the purchased baseload and peak volumes exceed the customers profile the gas can be sold back to the supplier. In addition to this, when purchased baseload and peak volumes fall under actual customer consumption needs, customers are able to ‘top-up’ and purchase extra volume in smaller blocks.
This is where the term ‘flexible’ energy contract really comes from – it allows a much greater degree of freedom to the customer. This is the vector by which the risk and reward of the wholesale market are passed onto customers.
Source: Business Juice
What is cheaper?
Back to the original question posed at the beginning of the article. Are dual fuel contracts cheaper?
For business customers, no. Not at all. Although it is easy to say this, this contract type simply doesn’t exist for commercial customers. A cheaper option could be to look into flexible contracts as an avenue to explore. We have oh so helpfully included a breakdown of flexible contracts in the section before this if it applies to you.
For domestic customers, also no. This will take a little bit of explaining so hold tight for a second.
Although there may be small savings offered by suppliers who provide dual fuel contracts, these really are not enough to consider them the ‘cheapest’ option. These discounts aren’t even offered by some suppliers. Further to this, comparison websites don’t even offer to search for dual contracts as an option!
It can work out cheapest to go with both supplies from the same supplier, but it is only cheaper because the two separate deals are the cheapest as individuals already, and not because it is a dual fuel contract.
This is a wordy explanation, we know.
For domestic customers, the tried and tested way to ensure you are getting the cheapest deal on both your electricity and gas is to search and compare each utility separately. If there appear to be suitable utility supplies from one supplier at a good price point, it may be worthwhile to enquire about dual fuel contracts.
Left feeling a little confused?
We recognise that the energy industry is a complicated place and not everything makes perfect sense.
But we’re here to help with that.
At Energy Solutions, we have a wealth of experience in the energy industry – operating for over twenty years. Our friendly energy procurement experts are up to date with the latest happenings, product offerings, and essentially – everything energy!
If you have any questions for our energy experts or would like to enquire about our services – we can be reached during all office hours on 0131 610 1688.
We look forward to hearing from you!
What are dual fuel contracts?
Dual fuel contracts are a contract option for customers looking for two different energy type supplies into the same property, that can be provided by the same supplier. When suppliers combine these two utilities supplies into the same monthly contract/invoice
How do dual fuel contracts work?
Dual fuel contracts work by combining all of your utilities billing into one convenient and easily managed space. This can only happen if your utilities are supplied by the same supplier.
What is cheaper, flexible or dual fuel?
This is somewhat of a trick question – and needs to be broken down slightly. Dual fuel contracts are really only available to domestic customers, and savings are pretty minimal. Flexible contracts are conversely really only available to business customers but can swing both ways (dependant on wholesale market movements). Flexible contracts definitely offer the most savings, but also the risk to be left paying a higher rate.
Who can use dual fuel contracts?
Dual fuel contracts are only available to non-commercial customers who can organise multiple utility supplies from the same supplier, for the same property.