Fixed or flexible energy contracts?

Fixed or flexible energy contracts? Many companies have no choice as traditionally flexible procurement is something that is reserved for the big energy users and not seen as an option for Mid Market energy users. However, we invite you to consider joining one of the UK’s best performing flexible buying contracts. As long as you have a HH Meter or gas usage over 300,000 kwh you might be eligible (subject to credit).

Why choose flexible energy contracts over fixed?

A Fixed price contract enables you to agree on a unit price for your gas and electricity and this price is then frozen for the duration of your contract. This can last anywhere between 1-3 years. Whereas a flexible price contract offers organisations a method of procuring energy that manipulates market trends and mitigates the risk of fixing the price at a high point in the market. Although the latter is thought of as the slightly riskier option due to the volatility of the energy market, in fact flexible procurement over time actually mitigates risk compared to fixed term contracts because on average Annual prices are around 0.4p p/kwh dearer for gas and electricity than monthly or quarterly prices.

Why does joining a basket help me?

One issue with flexible purchasing is that most energy brokers and suppliers won’t consider this type of purchasing unless you use over 10 million kwh. However, we combine client volumes to reach the requisite volume needed by a supplier and this gives you the purchasing power of a large energy user. Also we run Baseload and Peakload baskets so if you’re a high Baseload user you don’t cross subsidise others.

How does flexible procurement affect my billing?

Firstly, no budget these days is really fixed because usage can never be predicted and suppliers are passing through charges like RO & FITS which no-one can predict long term. Fixed contracts typically last from between 1-3 years and you know who your supplier is for the duration and the rate they will be charging. Flexible contracts are not that different as they can be for 1-3 years and will be with 1 supplier for the duration. Usually, even the rate will also be fixed and the difference being if we purchase energy lower than the fixed rate you receive a credit in the bill, bringing you under budget.

In additional to the above this year we are offering a free invoice validation service to all flexible contract customers!

Do I tell you when to buy the energy?

No. We realise that you don’t have time to monitor the market and hence we fully manage the purchasing decisions during the contract and we take responsibility for delivering you a price that beats the market each year. We keep you informed every step of the way through monthly trading and invoice validation reports (see trading report results below for 2012’s flexible basket).

What is the cost to my business?

If you use a broker at the moment we estimate that they are recouping on average anything between 1-5% of the contract value. We would propose to recover an indirect charge from the supplier of 1-2% of the contract value (depending on size). However, our service can save circa 10% on your energy spend (without taking into consideration any savings through bill validation).

Which supplier is your basket contract with?

Currently we are still in the tendering stage and Npower, Eon and Haven Power have made the final stages of the tender. We are trying to negotiate the best possible terms including the option to fully fix environmental charges such as RO and FITS and other contract terms that we have identified as being potentially detrimental to the client in both a fixed and flexible contracts. So in effect you will also benefit from group contract negotiating power as suppliers are prepared to consider bespoke terms for large basket contracts.

If your contract renews before the 1st October 2013 and you would like to learn more about joining the Pulse basket please contact us for a no obligation energy consultation.