Buying in bulk fixed energy contracts in context june 2015

www.energyteam.co.uk
Buying in Bulk: Fixed Price
Energy Contracts in Context
Learn about fixed price energy contracts in a new context and
find out why staggered purchasing may be a better option.

If you could buy a year’s worth
of petrol for your car in one go,
would you be willing to do it
at today’s pump prices?

That’s what most businesses do with their energy…
Fixed price energy contracts might give
you some stability, but rarely serve you
best in the long run.

Buying one, two, or three
years’worth of energy in a
single purchase is the default
method for the vast majority
of UK businesses
But it’s a
risky option.

Obviously, fixing all at once is quite a gamble, as
these are volatile markets and it’s impossible to be
sure when future prices will be at their lowest.

Even more risky is leaving your
renewal to the last few months of
your current contract. If you buy like
this, you only have a short window
to track the market and can end
up having to take a high price if the
market doesn’t move in your favour
before you have to lock in.
Obviously, fixing all at once is quite a gamble, as
these are volatile markets and it’s impossible to be
sure when future prices will be at their lowest.

A better solution would be
to stagger purchases over
many months, to spread
your price risk across
multiple purchases.

A better solution would be
to stagger purchases over
many months, to spread
your price risk across
multiple purchases.
By adopting this kind of
“flexible”contract, you can
buy more when you judge the
market to be weak and less
when you think it is strong.

You can still choose to buy a year or more at a time (if you
are confident of the price benefit), but that becomes just
one of your options, rather than your whole strategy...

Decision making
There are numerous sources of data and advice available to help flexible
buyers decide when the market is overvalued (and likely to fall), or when
it might be undervalued (and a good time to buy).

Decision making
Deciding when to hedge, and how much, can seem daunting at first, but
armed with a tailored risk management strategy, most buyers quickly
find their feet (usually supported by an expert energy broker service).

This year (2014), for example, prices fell steadily from January to July
- leaving those businesses that purchased all their energy early in
the year paying far more than those that held back and staggered
purchases into the summer.
Decision making
Deciding when to hedge, and how much, can seem daunting at first, but
armed with a tailored risk management strategy, most buyers quickly
find their feet (usually supported by an expert energy broker service).

Bulk value
If you stagger purchases, you won’t miss out on volume discounts.
Normally, the more you buy the lower the price, but flexible energy contract
terms are based on the total volumes you expect to buy, thereby recognising
your full buying power.

Bulk value
If you stagger purchases, you won’t miss out on volume discounts.
Normally, the more you buy the lower the price, but flexible energy contract
terms are based on the total volumes you expect to buy, thereby recognising
your full buying power.
And if your own consumption is not enough
to qualify for a flexible contract, there are
numerous consortium/basket deals that you may
be eligible to join (via a broker or trade association)
whereby the individual buying decisions are
managed for the group as a whole.

Buying energy in annual chunks presents significant risk of
over-paying. Now that you understand it in context, discover how
to manage energy price risk by downloading our eGuide:
Playing the energy lottery: How to manage your risk.
Download Now!

Buying in bulk fixed energy contracts in context june 2015

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Buying in bulk fixed energy contracts in context june 2015