4 minute read
Flexible energy contracts are worth exploring
Now more than ever is the time to be conscious of how much you are spending on your energy, especially considering the rapid spike in energy prices all over the world that is impacting us all. Making use of flexible energy purchasing options can be a way to help navigate through a volatile market.
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What are flexible energy contracts?
To put it simply, flexible energy contracts are long-term framework agreements. These contracts allow you to purchase energy for up to five years in advance and build a price made up of multiple purchasing decisions. The flexibility of this approach enables you to take advantage of wholesale market fluctuations and move quickly when the market is favourable.
With dramatic increases in energy prices over the last decade, the volatile market can be difficult to navigate and having a more strategic longer-term energy procurement plan will enable you to manage your energy requirements in a more cost-effective manner.
Energy procurement can be very time consuming for businesses especially as they need to understand when to go to market. At Control Energy Costs, our team of experienced market analysts build an effective energy purchasing strategy that addresses your business’ needs and helps you capitalise on market volatility to minimise costs. This enables you to get on with what you do best… running your business.
What are the benefits of flexible purchasing?
• Purchase energy up to 5 years in advance
• Ability to make multiple purchasing decisions
• Access to the wholesale market normally reserved for larger users
• Greater opportunity to reduce costs
• Have non-commodity charges passed through at published rates without a built-in supplier risk margin
• Ability to move quickly when the markets are favourable
• Spread risk when the markets are high
How exactly does it work?
Using historical consumption data, we will work with an energy supplier to agree your unique energy shape and tradeable blocks of energy that can be purchased over time.
A unique shape fee is paid on every kWh used, ensuring that you pay the same rate for all your energy even if your consumption falls above or below these tradeable blocks. This will vary depending on your business type and the days/ hours you operate.
Your monthly unit rate is made up from the weighted average of the individual energy blocks that have been purchased for the month in question, plus the agreed shape fee. You will receive a bi-weekly report with a market update and separate reports every time a new purchase is made.
What is the difference between fixed & flexible purchasing?
Fixed purchasing enables organisations to secure a price for the duration of their agreed contract, irrespective of any changing market conditions. Therefore, it appeals to businesses who want the security of known costs for an agreed period, ensuring budget certainty.
However, while fixed purchasing offers the security of knowing what price you will be paying for the agreed duration and protection against future market price increases, you also bear the risk of overpaying if you decide to fix your entire requirement on the wrong day.
Flexible energy contracts provide you with the opportunity to move quickly and grab the best deal when the market is looking positive. The longer the purchasing framework, the greater the prospect of minimising risk and exposure to volatility. With a flexible approach, energy purchasing is constantly reviewed and adjusted, allowing you to purchase at the right time.
Why choose Control Energy Costs?
With over 30 years of experience, our team are highly qualified in determining the right time to purchase. We monitor and discuss the markets daily and meet weekly, using market data from suppliers to assist our modelling and purchasing.
Our strategy entails purchasing decisions made on behalf of our clients; however, we can easily accommodate clients who wish to operate their own strategy.
Our dynamic energy procurement approach is both flexible and adaptable. We dispel the smoke and mirrors approach to third party pricing, opting instead to provide concise, transparent costs to all our clients.
Which is the best option for your business?
Fixed or flexible, the choice is yours. It is best to pick what suits your business model and the purchasing option that best facilitates the needs of your business. Whichever contract you opt for, the intention is to secure the best prices and for you to receive accurate invoicing.
https://cec.uk.com/
