Benefits of a Fixed Price, Refund when price is overestimated… Engie Fair and Square!
Why Engie Fair and Square? The price you see on your bill covers more than the electricity commodity cost. In fact non commodity costs also referred to as Third Party Costs now account for more than 60% of an average users bill. Non commodity costs predominately fund the switch to renewable energy, Renewables Obligation (RO), Feed in Tarrif (FiT), Electricity Market Reform (EMR including CfD and CM). They also cover infrastructure enhancements required to ensure our network can support smaller renewable generation instead of the old power stations, Distribution Use of System (DUoS), Transmission Network Use of System (TNUoS).
These costs are not set by your energy supplier, the energy supplier collects them on behalf of other parties, including the government. Your energy supplier has to predict these costs in order to set the price you see on your fixed price contract. When you secure a Pass Through contract the supplier simply fixes the commodity cost and passes through, along with all the budget risk, the third party costs to the consumer.
As you can imagine, there is a great deal of risk when a supplier such as Engie offers you a fixed price contract, this risk increases as the contract duration increases. The supplier forecasts these charges in order to determine how much to charge you during your contract. If the forecast is too high, they would be left with extra margin at the end of the contract. If the forecast is too low, they would take the hit and the customer would have paid below market for these costs. The supplier balances a forecast high enough to cover their share of these costs, whilst low enough to remain competitive.
Engie is aware that all this risk adds a premium to their fixed contract. They are now offering a solution to clients enabling the customer to enjoy the perks of a fixed price, i.e. budget certainty, and peace of mind, whilst offering a credit on over-estimated Government Third Party Charges should their forecast be too high. This is a one side arrangement in the customer’s favour. Engie will reconcile the charges at contract end date. If they get their forecast wrong and discover they over estimated, they will refund the difference to the customer. If they underestimate, they do nothing and take the hit. So, the customer wins either way… budget certainty and a potential refund if the conditions go in the favour of the client!
Engie Fair and Square is applicable to both Standard and Renewable Electricity Contracts. Reconciliation takes place within 120 days on contract end date, a statement is issued to customer showing reconciliation calculation. If a refund is due it will be credited to customer account. The following Government TPCs are included in the reconciliation calculation at the end of the contract period:
- FiT (Feed in Tariff)
- CFD FiT (Contracts For Difference Feed in Tariff)
- RO (Renewable Obligation)
- CM (Capacity Market)
Both Non Half Hourly and Half Hourly customers may qualify and a minimum of a two year contract is required. Start date must be within 18 months of contract signature, and customers must complete the full term to qualify for a refund. Each contract must have an Expected Annual Capacity (EAC) of no more than 20GWhs.
If you want to know more about Engie Fair and Square contact Direct Power today. In an ever evolving market place, we will help you decide which contract best suits your needs.
