placed on the interconnector pipeline to raise its capacity. Rough Storage is back to normal. Gas storage capacity has increased. There are even rumours of a new gas field discovery in the North Sea. But perhaps most significant and immediate in driving down the wholesale price has been the freeflow of gas supplies through the Langeled pipeline which has seen day ahead prices drop intAs gas and electricity wholesale prices continue to tumble it’s highly questionable why many of the major suppliers are still actively encouraging small and medium sized businesses to sign up to longer term fixed price contracts, invariably set at a premium above their normal annual contract rates.

U.K. electricity wholesale prices rose to a peak this year due to a number of factors which have been widely cited – the dwindling North Sea gas reserves, the lack of gas storage capacity, the Zeebrugge–Bacton pipeline operating well below capacity, the fire at Centrica’s Rough Storage, rising world oil prices and so on.

All of all these things happening at once culminated in a huge hike in the wholesale price of gas and electricity and there were real fears, if a little exaggerated, of whether or not UK inc. would survive last winter without major restrictions being placed on industry and commercial customers’ supplies.

Many business customers on fixed term contracts received their shocks with one massive price increase, in some cases reaching as much as 140% where their previous contract had been fixed some 5 years before. Hikes in retail prices followed in stages for domestic customers, the last of which will be implemented by Scottish and Southern Energy in January 2007.

Just how close we were to meltdown remains unanswered. However, what is certain is a change in circumstances surrounding every one of the factors which led to the price hikes.

Oil prices have plummeted from their peak. Pressure has been placed on the interconnector pipeline to raise its capacity. Rough Storage is back to normal. Gas storage capacity has increased. There are even rumours of a new gas field discovery in the North Sea. But perhaps most significant and immediate in driving down the wholesale price has been the freeflow of gas supplies through the Langeled pipeline which has seen day ahead prices drop into

rs which have been widely cited – the dwindling North Sea gas reserves, the lack of gas storage capacity, the Zeebrugge–Bacton pipeline operating well below capacity, the fire at Centrica’s Rough Storage, rising world oil prices and so on.

All of all these things happening at once culminated in a huge hike in the wholesale price of gas and electricity and there were real fears, if a little exaggerated, of whether or not UK inc. would survive last winter without major restrictions being placed on industry and commercial customers’ supplies.

Many business customers on fixed term contracts received their shocks with one massive price increase, in some cases reaching as much as 140% where their previous contract had been fixed some 5 years before. Hikes in retail prices followed in stages for domestic customers, the last of which will be implemented by Scottish and Southern Energy in January 2007.

Just how close we were to meltdown remains unanswered. However, what is certain is a change in circumstances surrounding every one of the factors which led to the price hikes.

Oil prices have plummeted from their peak. Pressure has been placed on the interconnector pipeline to raise its capacity. Rough Storage is back to normal. Gas storage capacity has increased. There are even rumours of a new gas field discovery in the North Sea. But perhaps most significant and immediate in driving down the wholesale price has been the freeflow of gas supplies through the Langeled pipeline which has seen day ahead prices drop int

a little exaggerated, of whether or not UK inc. would survive last winter without major restrictions being placed on industry and commercial customers’ supplies.

Many business customers on fixed term contracts received their shocks with one massive price increase, in some cases reaching as much as 140% where their previous contract had been fixed some 5 years before. Hikes in retail prices followed in stages for domestic customers, the last of which will be implemented by Scottish and Southern Energy in January 2007.

Just how close we were to meltdown remains unanswered. However, what is certain is a change in circumstances surrounding every one of the factors which led to the price hikes.

Oil prices have plummeted from their peak. Pressure has been placed on the interconnector pipeline to raise its capacity. Rough Storage is back to normal. Gas storage capacity has increased. There are even rumours of a new gas field discovery in the North Sea. But perhaps most significant and immediate in driving down the wholesale price has been the freeflow of gas supplies through the Langeled pipeline which has seen day ahead prices drop int

tail prices followed in stages for domestic customers, the last of which will be implemented by Scottish and Southern Energy in January 2007.

Just how close we were to meltdown remains unanswered. However, what is certain is a change in circumstances surrounding every one of the factors which led to the price hikes.

Oil prices have plummeted from their peak. Pressure has been placed on the interconnector pipeline to raise its capacity. Rough Storage is back to normal. Gas storage capacity has increased. There are even rumours of a new gas field discovery in the North Sea. But perhaps most significant and immediate in driving down the wholesale price has been the freeflow of gas supplies through the Langeled pipeline which has seen day ahead prices drop int

placed on the interconnector pipeline to raise its capacity. Rough Storage is back to normal. Gas storage capacity has increased. There are even rumours of a new gas field discovery in the North Sea. But perhaps most significant and immediate in driving down the wholesale price has been the freeflow of gas supplies through the Langeled pipeline which has seen day ahead prices drop into negative territory.

With the exception of the gas field discovery and the falling oil price it may be argued that the correction in all other factors were predictable and therefore ought not to have been fully loaded into the recent retail price rises. After all, most of the major retail suppliers are also involved in the generation and storage side of the industry and so would have had a good idea of the likely supply position in advance.

Whatever the case in favour of the huge price rises it cannot be denied that wholesale prices are now dropping, and dropping fast.

Graham Paul, Marketing Director of Electricity 4 Business, one of the U.K.s cheapest business suppliers, claims that “ A rising market has traditionally been the driver of the fixed price longer term contract. When prices begin to fall, as happened in 2001, the accepted best practice is to wait until they have fallen to a level where you are confident that they can’t drop much further and only then is it advisable to fix a contract for as long a period as possible.”

With a contract which is due for renewal soon it is probably best to shop around for the best one year contract available and then seek to extend this once wholesale prices begin to stabilise.

It certainly doesn’t make sense, despite scare mongering by the major suppliers, to fix a long-term deal at peak prices created by short-term market fluctuations.

For those businesses who have already missed the deadline to avoid a rollover contract and are obliged to renew at very