Energy Procurement can be broken down into four key elements:
Planning the Procurement Strategy
The planning phase is one of the most important stages of energy procurement. During the planning phase you will need to gather relevant information which falls into two categories; Energy Cost Analysis and Administrative.
Energy Cost Analysis identifies overall consumption, spend and contract structure. Whilst many organisations have most of this information to hand, a professional Energy Partner should undertake a full no-cost site audit to build this important picture and present this back to you in an easy-to-understand report. Information reviewed may include:
The Administrative element ensures contracts are set up in the correct legal entity and all account information for management of the account is maintained, including:
A risk strategy will require the organisation to evaluate their appetite for risk, as this will determine the most appropriate type and duration of contract(s) for their energy supplies. For example, whilst there may be an intuitive attraction towards so-called flexible contracts, this must be balanced against the exposure to risk embedded within them and the management of them. Conversely, a fixed contract must be the result of a full and competitive tender to ensure the supplier and rates are Best Value at the outset.
The two main types of contract available to you as a business are fixed and flexible with each having their own pros and cons:
Not all supplier products are equal, so robust analysis is required to ensure any contract offers are showing genuine like-for-like comparisons which are clearly identified. This is particularly challenging since the energy supply market is unregulated with no standard contract for either supplier or Broker. Failure to compare like-for-like offers may result in unexpected rate changes, additional pass through or other unexpected costs which can be very considerable.
Deciding when you should go to market is difficult, and a sensible strategy is to tender very early, if only to gain a forward vision of prices. The tender can be repeated prior to contracting but this can also yield considerable opportunities for savings based upon a prevailing weak market for example.
Short term global economic and climatic events can radically transform market conditions, with potential supply disruption, unplanned consumption increases, or decreases, and political events or economic influences. Hence an early tender for a fixed rate contract in a favourable market can eliminate these unwelcome variables.
Always ensure the consumption data is up to date and correct as it is essential for a supplier to make an offer based on the data provided. Errors on data and consumption, may result in pricing errors in the proposals.
When going to market you should have prepared your wish list, which includes the organisations intended outcomes:
With over 50 business energy suppliers in the UK Business Energy Market, it is a complex and time-consuming undertaking to ensure you are obtaining the right product for your business at the best energy price. This is particularly relevant where multiple suppliers and sites are being tendered and the subsequent results analysis is required.
To help reduce the burden on your business, Powerful Allies has a wealth of knowledge and expertise available to you, enabling us to quickly obtain, review, benchmark and present offers to you at a time when market conditions are advantageous, ensuring you secure the best possible deal which is tailored to your business. We aspire to become a valued and trusted Energy Partner to your business in the fullest sense, providing a high level of support and guidance so always ask what added value they can provide to your organisation beyond procurement.
With over 2500 unregulated Energy Brokerages in the UK, it is always advisable to undertake some basic checks to help you gauge the reputability of who you are dealing with. Some of the basics we would advise are;
Also seek written confirmation that: