How to get the best price for your energy

This simple step by step guide is designed to help you procure your energy in the market place in order to achieve the most competitive price for ongoing supplies. With the wholesale energy market on a general upward trend and an expected cost nearing £100/MWh by 2020, along with Government incentives to reduce consumption (aka pass through taxes such as CCL, Feed-In-Tariffs, Renewal Obligations, Carbon Floor Price etc etc), energy costs are forever increasing and becoming an important element on company's P&L. It is therefore paramount that you are getting the best price available for your specific needs. This guides aims to help you do that but should you need any further assistance we are here to help on 01253 851818 or info@theutilityforum.co.uk Step 1 – Information for Tender Firstly, you need to gather all the relevant information about your supply and include it on a tender document. This information should include: - a) Whether your supply is half hourly or non half hourly b) The supply address and billing address if different c) The company registration number for credit checking d) A usage profile including the operating structure and maximum demand to show how and when the energy is used e) The latest year of half hourly data if applicable or an annual day/night/eve-wkend split depending on the profile of supply. f) The full supply number, including the profile number, meter time switch, line loss factor and meter point administration number (this is different to the serial number and cannot usually be found on the meter). g) The supply voltage and capacity h) The current supplier of your meter operator and data collector agreements (these are often different to the supplier of your energy) i) The pricing structure required (2 rate, 3 rate, 6 rate etc) j) The start date required and the term of quotation required k) Instructions of where and how you would like quotations to be received, including a specific return date to ensure prices are compared on the same day Step 2 – Tender to suppliers The tender document should then be issued to all reputable suppliers in the market place, not just the ‘big 6’. This will ensure that you get a full comparison of prices across the market place. As a rough guide, we usually issue each of our tender documents to about a dozen suppliers each time. Step 3 – Comparing prices Upon receipt of all prices, a like for like comparison should be drawn against the same consumption profile that was included on the tender. Each element of the supply cost should be compared including: - a) Tariff rates (day/night/eve-wkend etc) b) Distribution Use of System Charges c) Transmission Network Use of System Charges d) Supply Capacity e) Fixed costs f) Feed-In-Tariff and Renewable Obligation g) CCL or equivalent (specifically on green quotes) h) Settlement and data charges (depending on the supply of your data collector) i) Meter operator charges (depending on the supply of your meter operator) An annual cost can then be estimated for each quotation allowing you to compare various contract lengths from various suppliers. Some important notes to make: - • If ‘Supplier A’ is most competitive on 12 months, it does not necessarily mean that they will be the most competitive on 24 or 36 months so you will need each supplier to quote all durations required. • Prices change on a daily basis (hourly in some circumstances) so if a decision is not made within the same day of the quotation, refresh prices will be required. • Should refresh prices be needed, you should obtain revised prices from all suppliers that have initially quoted as the most competitive suppliers are not necessary going to stay the most competitive due to the different and complex buying patterns each supplier has. Step 5 – Negotiation There is usually some room for negotiation over the initial prices offered depending on the suppliers margin and how much the supplier wants to win your business (this will very much depend on individual targets on a week by week basis). Sept 6 – Decision Making Once you are certain you have the most competitive price available for your ongoing supplies, you should secure your deal and ensure the chose supplier locks in your price before the market closes (this is dependent on the suppliers buying pattern and on what day of the week it is). Hard copy contracts should then be followed up in due course. There are of course many elements to consider when procuring your energy. For example, the wholesale energy market is very much dependent on other commodities such as oil and the weather can also have a drastic effect on prices due to higher demand, both winter and summer alike (heating and cooling). It is therefore important to look at the bigger picture when deciding when to lock in your prices and for how long and to closely monitor the prices daily. We hope that this guide gives you some help should you have the capabilities and time to do your energy procurement in-house. If, however, you require any further assistance, The Utility Forum have been providing expert procurement solutions to our clients for many years and would be happy to help you. Call us on 01253 851818 or email info@theutilityforum.co.uk and one of our specialists would be happy to help.