Is “Blend & Extend” Worth It?

The latest energy market news, and what this means for you:

Energy commodity costs continue to soften and we have seen reductions of 14% & 12% in the 2 year electricity & gas costs over the last 3 weeks. This has been driven by plentiful supplies of gas and good renewable generation. There remains muted demand for gas in Asia. Should these factors and current good weather continue we can expect prices to fall further.

While commodity costs are now at 10.5 & 3.5ppkW respectively, there had been little movement in the contractual rates on offer to customers with a recent sample showing averages of 30.3 & 8ppkW and standing charges of £2.88 & £1.82 per day. The figures in the last energy update were 30.2 & 8.95ppkW and standing charges of £2.03 & £1.16 per day. While it’s difficult to draw firm conclusions from small data samples there’s no evidence that suppliers are passing on these savings!

In the last week Nationwide Energy has been provided with examples of “blend & extend” customer offers, with the supplier ending existing 12 month contracts at 6 months and offering new 30 month contracts. As an alternative, we modelled the costs for the customer if they remained in their current contracts and agreed new 2 year contracts commencing at the existing contract end date. The blend and extend offer was typically 11% more expensive. It’s hard to avoid the conclusion that whilst effectively cost neutral for them, suppliers are using this opportunity to get the customer to pay more in the long-term to reduce their very expensive current rates.

Many businesses are struggling to pay current energy costs and some may have little alternative than to take an offer which spreads these costs over a longer period.

Before agreeing to any contract extension it’s worthwhile taking advice on what alternatives there are to agree new contracts and get much better prices when the current contract ends.

Our team at Nationwide Energy would strongly suggest that customers who are due to renew in the next 6 months contact our field consultants or renewals advisors for a market review and update on the prices available to them.

If you are in this position, get in touch via telephone or email:

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