With the peak autumn electricity purchasing deadline approaching, businesses are being encouraged to plan ahead to make the most of the cheapest wholesale energy prices for almost five years.
“For some years now, the overriding message has been that energy prices are only going one way – up. But this isn’t altogether true”, said Peter Pharoah, Head of Energy Markets at business energy broker ENER-G Procurement.
He continued: “While we have seen some large peaks and troughs over the past five years, energy prices are now at a similar level to 2009 and have remained at low levels over recent months. If you can make the right decisions at the right time, you can massively reduce your energy costs and avoid getting sucked into a spiral of fixing at the wrong price.”
ENER-G Procurement is urging businesses to consider their options well ahead of the traditional October fixed contract purchasing deadline. This might include considering a move from fixed style to flexible purchasing, which allows organisations to purchase smaller chunks of energy throughout the length of the contract, potentially buying during price dips and avoiding costly spikes.
This avoids playing a ‘lottery’ with fixed energy contracts, where a business ‘locks-in’ to the wholesale price of at the time of purchase.
For smaller businesses that have traditionally been excluded from flexible purchasing, there’s a new generation of collective energy purchasing products that enable smaller customers to combine their purchasing power, buying ‘little and often’ as part of a managed flexible purchasing consortium service.
Peter Pharoah continued: “ Many websites constantly bang the “fix now, fix for as far as you can” drum. However, this isn’t necessarily the case – especially for your typical industrial, commercial or SME consumer. For instance, take the price of gas for delivery this winter. Back in October 2009, you could buy your wholesale gas to take in Winter 14/15 for a little over 70p. You can buy it now below 60p. Although admittedly, there has been considerable volatility since October 2009, prices are cheaper now than for nearly five years.”
ENER-G advises businesses to consider the entire cost of their energy bill, not just the wholesale price of gas and electricity. Other elements, such as taxes and levies, distribution and transmission costs and other fees and payments can account for almost half the bill.
ENER-G Procurement is an independent energy purchasing specialist and a founding member of the Utilities Intermediaries Association (UIA). ENER-G works with UK manufacturers’ organisation EEF to provide the EEF Energy Services.
Further information: www.energ.co.uk/procurement