June 16, 2005

With competition for business energy customers increasingly fierce, UK suppliers are keen to tie their clients into longer contracts. Some of them, such as Centrica and RWE npower, have been reasonably successful in that.

Overall, however, suppliers are not having much luck with extending contract tenure, with the average electricity contract getting three months shorter between 2004 and 2005.

The brief focuses on the B2B (non-residential) segment of the UK electricity and gas supply markets. Featured in the brief are RWE npower, Centrica, British Energy, SSE, Scottish Power, GDF, E.ON Energy, EDF Energy, Total and Shell Gas Direct.

Despite UK supplier's efforts in offering longer-term contracts to their business clients, over the last 12 months the average contract tenure has declined by 3 months in electricity and remained static in gas. One possible reason for that is that users are plumping for a shorter contract in expectation of better terms the next time.

Centrica and RWE npower lead the way in longer contracts. By contrast, GDF, Centrica, E.ON Energy and Shell Gas Direct are below the industry average.

Source: Research and Markets