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What is a blend and extend contract?


What is a blend and extend contract?


As you are most probably aware, the price of energy never stays the same, there is a constant shift, and sometimes you may be unfortunate enough to see energy prices come down whilst you are already stuck in a long term contract that was set up on higher prices. Fortunately, there may be a way round this with a blend and extend contract which can be beneficial to both the consumer and the energy provider. 

Blend and extend contracts are very popular in the current market, and are mostly beneficial to customers who secured themselves a long term contract before energy prices dropped. Basically, the contract allows you to take advantage of the lower costs, by extending your current contract, by another 1 or 2 years, and today's lower energy rates are combined with the rates on your current contract, which reduces your energy bills immediately. 


How does blend and extend work?


Let's assume, for example, that you have 1 year left on your 2 year contract and you have just noticed that energy prices have come down since you took out that contract. You cannot break out of this current contract to start again but you feel you are now paying too much. The next best option is to blend and extend your current contract, and you can do this by adding 1 year on top of your contract with the new lower energy prices, and you don’t have to wait a year to see your bills drop, this can happen straight away. This works by ‘blending’ the 2 prices you have secured, the higher price on your original contract and the new lower price, meaning you will pay somewhere in between the higher and lower price for the remainder of your contract.


Things you should consider


Some things you should bear in mind when you are thinking about blending and extending your contract; 


  • The price you are currently paying could drop immediately, but this new blended price could be higher than what it would have been, (see the graph above) so you need to consider what works best for you. 



  • Blending and extending essentially allows you to renegotiate your current contract at a lower rate by extending it, which benefits both you and the energy provider. 



  • Opting for a blend and extend contract is ideal for customers who want to lower their spending in the short term. 



  • Not every business energy provider is willing to offer blend and extend contracts, but this is something we can sort out at Utilink Consulting. Give us a call today if this is something you are interested in on 0330 054 0471.


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