The energy market is highly volatile, ever changing and unpredictable. With constant price fluctuations from changing wholesale and non-commodity costs, certainty in planning your energy budget may seem out of reach.
If you are a business owner or manager working with a particularly rigid budget, you might do well to consider a more simplified fixed energy procurement strategy rather than a flexible procurement deal. A fixed energy contract will help ensure budget certainty and provide accurate financial planning.
Why Select a Fixed Energy Contract?
A fixed energy contract allows you to fix all your energy charges over the long-term, and secures all of your commodity and non-commodity costs. However, when you’re procuring this type of business energy contract, it’s important to understand whether all your costs are fully fixed, as not all non-commodity charges are set within a fixed-price contact.
While fixed-price contracts are available to any business, they are usually best for smaller to mid-sized companies that don’t devote a large portion of their production costs to energy (typically with a spend <£500K) and are highly recommended for companies who require price certainty.
Benefits of Fixed Energy Contracts:
- Budget certainty + choice of contract length (1-3 years)
- Protection against third-party costs
- Protection against large market swings
- Simple billing and price comparison
- Less Management time/interference required.
How PES Can Help
When performing energy procurement it can be time-consuming for any business owners or managers to select the best energy contract. Comparing costs and analysing energy needs can take hours of your valuable time.
The good news is that Professional Energy Services (PES) can manage the entire energy contract tendering process on your behalf, adhering to the highest standards of transparency and risk management. Every day, we build upon our stellar reputation for negotiating competitive contracts during the most advantageous market opportunities.
Throughout the negotiation process, we influence energy suppliers to minimise their margins and maintain competitive rates; we also optimise the fixed contracts timing and length, meaning that If energy prices are low, we recommend a long-term contract, but if energy prices are high a shorter contract is likely to be more appropriate.
What to expect when outsourcing your fixed energy procurement
By partnering with PES you will receive:
- An account manager who will deliver tailored advice regarding your specific situation
- Supplier recommendations based on their services and prices
- Help with change of tenancies and site additions
- Recommendations on if you should keep or pass through elements of the full-delivered price, for example; extra charges may be brought in by the Electricity Market Reform and we then compare different complex quotes so you can compare like-for-like contracts
- Overviews of renewal costs via weekly Price Trackers and interpreted market intelligence
- Assurance that supplier contracts reflect agreed terms
Our energy broker team will watch the markets for you, striving to fix your price at the best opportunity for the right duration. Our goal is to free up your time to allow you to focus on managing your business.
Our fixed-price gas and electricity framework is fully OJEU-compliant, and has been tendered in line with Public Contract Regulations (2015).
Fixed Pass-Through Contract
This type of fixed contract is recommended if you can be flexible with your energy usage patterns. The main target is to avoid the distribution costs associated with different distribution periods. This can prove to be a very cost-effective way of achieving further efficiencies outside of the standard procurement model.
At PES, Our energy reporting systems alert you to these different distribution periods and help you avoid peak periods.
This type of fixed contract secures the commodity rates and leaves all other elements of the electricity price passed through at cost from the supplier. At present, there are two main risks associated with this:
- The non-commodity element makes up 60% of the overall cost of electricity
- The significant legislative changes for 2022 and beyond that will impact your energy spend.
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