Energy Buying Strategies for the current price hikes…
We all know that energy prices are sky high, but did you know there are a couple of simple strategies everyone can use to help mitigate these record energy prices?
Be Proactive
Secure your renewals early, do not leave your contract decision until the last moment. Why be proactive?
• If you delay your decision you cannot plan your budget.
• Energy suppliers are exiting the market and restricting quoting, so a delayed decision may mean fewer suppliers willing or able to quote for your contract.
• Energy costs for Winter 22/23 are going to be very expensive, bite the bullet and secure your contract renewals, as a delay could cost you more.
• The large majority of business customers have an October/November renewal date, so there is a flood of price requests in the energy market as we get closer to autumn. Don’t get caught in that tidal-wave, as suppliers will be selective about what they will quote for in late summer, early autumn.
• As inflation hits, suppliers will become tougher on their credit check requirements.
Go with a longer term contract
Going for a longer term deal enables you to offset the higher prices along the forward pricing curves for Winter 22/23 and Winter23/24. At this time a three, four or five year deals will give you much cheaper rates than a one or two year deal. Not only does a longer term deal give you a cheaper price, additionally you gain peace of mind and save time, money and resources associated with repeatedly securing one or two year contracts. We see price curves for the next couple of winters and it isn’t pretty, so longer term will help you off-set those costs.
Go Flexible
For larger users (typically 400,000kWh+/yr.), now is the time to seriously consider a flexible type contract.
Energy prices fluctuate, just like petrol prices do at the pump, and stocks on the stock market. Prices change from day to day, even minute to minute for larger consumers of energy. Every energy consumer wants to time it pefectly, securing their contract on a day with low prices. Time the market right and you can save big, time it wrong and it can cost you. Let’s face it, you have a business to run which means it is impossible for you to perfectly time all your energy contract decisions. The solution is easy, hands off, and saves you a lot of work and worry. When you opt for a flexible energy contract, you negate the need to time the market. The flexible contract does the hard work for you, with multiple advantages as outlined below:
•You no longer need to time the market. Relax, you will have professional energy traders securing energy to meet your consumption needs as and when price conditions are favourable. You spread the risk with multiple purchases made on your account instead of just one.
• You remove the risk premium that makes a fixed price so expensive. In times of energy crisis, the risk premium is even higher, which means the flexible type contract is even more attractive.
• You save time and administration resources. Flexible contracts can operate on an ongoing basis for a number of years. No more wasting time each year co-ordinating with your colleagues, TPI and various suppliers to line up tenders, quotes and contracts.
• When choosing a Flexible contract you can emphasise the supplier’s service over the price, as the price will be ‘market price’, so to a large extent supplier agnostic.
• You can worry less about minimum and maximum take clauses, as these are applied at basket not individual meter level.
• You can take advantage of scale of economy pricing, as this product allows smaller industrial and commercial consumers to secure the same rates as some of the UK’s largest Industrial and Commercial customers. Resulting in a edge over your competitors who opt for a more traditional energy contract.
• You can off-set periods of high price, with periods of more competitive prices to lower your overall energy spend.
Many of the suppliers we work with offer their own flexible product. In addition to the supplier’s flexible contracts, at Direct Power we are pleased to offer a Flagship Flexible solution, which enables smaller consumers to take advantage of a flexible contract. It gives the traders more freedom on purchasing decisions, so the end result is a better fit for the customer.
Energy Accomplice
Follow this simple advice to give you clarity and a plan of attack for your upcoming contract renewal. The energy market is a hard place to be, don’t go it alone. Get in touch with Direct Power today so you have an energy accomplice at your side. We can help you with:
• Longer term contracts.
• Flexible contract solutions.
• Energy efficiency audits.
• Consumption reporting.
