Fish and Chip Shops and Commercial Gas Prices - What You Need to Know

24 April 2017

Fish and Chip Shops and Commercial Gas Prices - What You Need to Know

Do you use gas to power kitchen equipment, heat your dining area, or to supply hot water? If so, commercial gas prices will impact your business. As with most costs you have as a fish and chip shop owner, the price of gas is not fixed. i.e. the price you pay depends on a range of factors.

Contract

The type of contract you have (or don't have) can have a significant impact on the price you pay for gas. The option most fish and chip shops go for is a fixed term contract, usually fixed to one to three years. The price you pay for gas - both the unit rate and the standing charge - are usually fixed too, making it easier to budget.

The other type of contract you can have is a rollover contract. This applies at the end of a fixed term contract when your supplier informs you of your new deal. You can cancel and switch to a new provider but if you don't, it’s assumed you automatically accept the new terms. Not all commercial gas suppliers operate this way but if yours does, you could be locked into another period with the same supplier.

You may also have no contract at all. In this situation, you’ll pay what is known as out of contract rates or deemed rates. These rates are almost always higher than fixed term rates. Some of the common situations where this applies is:

  • When your supplier doesn’t implement rollover contracts and you do nothing when your fixed term contract ends. In other words, your supplier will continue supplying you but will charge an out of contract rate.
  • When you move into new premises and have not yet signed a fixed term contract.

Tariff

This usually applies to fixed term contracts. Most gas suppliers will offer you a range of tariff options so you can get one that best suits the needs of your business. Tariffs vary depending on things like the length of contract, the unit rate, and the daily standing charge.

Business Priorities

Your gas supplier sets its rates based on the needs of its business. This includes the price of gas on the wholesale market as well as other things. For example, a gas supplier might decide to do a push for new customers so will lower its rates.

In addition, gas suppliers usually give their best rates to business customers with good credit ratings.

Global Price of Gas

The final thing that impacts on the price of gas you pay in your fish and chip shop is global fluctuations in prices. Gas suppliers will attempt to hedge when purchasing gas to keep fluctuations to a minimum, but if the overall trend over time is the wholesale price goes up or down, the price you pay will move with it.

What Can You Do

Some of these influences on commercial gas prices are outside your control. Where you do have complete control, however, is who supplies you with gas. You should, therefore, conduct thorough market research every time your contract comes up for renewal.

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