The Basics….
It is key to understand that Suppliers go to the same marketplaces to buy and sell energy as their competitors; they are looking at the same screens for pricing as one another.
The larger the consumer, the more tools available to buy your energy
Larger consumers are given keys to a much larger toolbox than smaller customers when it comes to purchasing energy. If you qualify for these tools and do not take advantage of them, you are leaving money on the table. These tools take the form of more advanced contract styles. The beauty of these contract tools is that you don’t have to be an energy trading wunderkind to benefit from them.
Customers frequently conflate certainty with competitiveness
Fixed contracts have their place and are fantastic for the smaller consumer. However, they give larger consumers a false sense of price competitiveness. Customers all too often confuse certainty for competitiveness, they are not the same and this confusion can be very costly. Think of energy Suppliers as shoppers in a bustling market. They all go to the same market stalls, see the same energy listed for the same price. There are no secret stalls. As suppliers buy the energy that is re-sold to the consumer from the same marketplaces, there is limited difference in the cost of their “raw material”. Suppliers are simply re-selling you a commodity they purchased from the same place as their competitors. The difference between leading suppliers is frequently less than 1%.
Timing is the key to competitive prices
Forget comparing Supplier A to Supplier B to deliver you the “best price”. As stated above, the difference between leading Supplier prices is minimal as they source their product from the same market. Timing is the key to competitive prices. Prices can change as much as 10-20% in 24 hours. Harnessing volatility is the tool used by savvy consumers to achieve better prices.
Fixed Non-Commodity costs and Flexible Commodity costs: a balance of certainty and adaptability to give the customer peace of mind and competitive advantage on a Flexible supply contract
The price listed on the monthly energy invoice is a simplification of multiple elements of cost. These are split into two main categories: Non-Commodity and Commodity costs. Non-commodity costs are NOT set by the energy supplier and are confirmed customers in advance when securing a Flexible contract. Commodity costs are set by the Supplier and will vary month to month depending on market dynamics. Currently Non-commodity and Commodity costs account for roughly half overall costs, so you have an even balance of fixed and flexible cost components. This enables you to plan your budget with greater peace of mind.
Lessons:
- STOP focusing on which supplier is “cheapest”.
- STOP focusing on the small wins and re-focus for BIGGER gains.
- START focusing on which supplier enables you to TIME the market.
Options:
Timing is not complicated nor risky, in fact it is the exact opposite. There is much more risk in picking a random day to secure a fixed contract, than to timing the market. At Direct Power we offer a variety of contracts that enable the customer to successfully TIME the market. All are fully transparent and professionally risk managed. Say goodbye to worry, indecision and inefficient contracting. Say hello to competitive prices, professional risk management and intelligent contracting.
We have three main options to choose from that enable our customers to TIME the market. Each have unique features, so all customers can find a perfect contract fit. We are here to tailor the contract solution to your organisation’s needs:
- Flexible Bespoke
Ideal for the larger consumer who wants more involvement in their energy contracts ongoing. Expertly tailored solution to your specific requirements. - Flexible Basket
Perfect for all customers who meet consumption thresholds. This is the ultimate set and forget contract. You know the non-commodity costs up front and then the commodity trading team take care of the rest. Sit back and relax safe in the knowledge that your energy is purchased with professionally timed execution and risk management. - Flexible Unity
Ideal for flexible contract first timers. This unique product on the UK market, enables customers to switch back and forth between flexible and fixed buying strategies. You can even agree preferred price ranges during onboarding, enabling the commodity team to set positions to secure energy according to your requirements. This can be as hands-on or hands-off as you prefer. A hybrid approach that is unique in the market and gives you the perfect balance of fantastic prices and great comfort.
Action plan:
Contact Direct Power today to determine if your consumption is large enough to qualify for a contract that allows you to TIME the market. Timing is not complicated or risky, in fact it is the exact opposite!
