Business energy broker ENER-G Procurement has released a free e-guide, designed to help businesses decide between fixed or flexible energy purchasing strategies.
The guide ‘Fixed vs. Flex: What type of energy contract is right for you?’ examines factors such as risk, complexity and value for money, to help organisations make informed energy purchasing decisions.
“Many businesses today choose fixed price energy contracts without considering flexible options, which can prove better value and are not just for large energy users”, said Mark Alston, Director of ENER-G Procurement.
He added: “While fixed energy contracts provide a higher degree of budget certainty, the ‘energy-price trap’ sees many businesses commit to a fixed price one day, and then maroons them if the market price falls away. What’s more, fixed energy plans often have extra charges built into the tariff to insure the provider against unforeseen price rises.”
He continued: “The adage that energy prices always go up is a weak foundation for fixing prices. Just in 2014, you would have paid around 15% more for an energy contract in January than you would have in June. Alternatively, if you were on a flexible contract you could buy ‘little and often’ to take advantage of market troughs.”
While purchasing energy flexibly provides a potential opportunity to lock-in to lower prices, management is more complex – requiring more management input – and buyers should implement a robust risk management system. As such, it won’t suit all organisations.
The guide navigates businesses through the complex choices and highlights other ‘hybrid’ contract option, including partially fixed and partially flexible prices, together with collective products, which offer flexible prices to even the smallest business energy customers.