Business Energy Procurement

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Offering your business an opportunity to benefit from lower energy costs, a pass-through contract has two elements; fixed energy tariff and non-energy related costs.

What is a pass-through energy contract?

A pass-through energy contract covers two types of costs; your fixed energy use and non-energy costs. Wholesale energy costs are agreed and fixed at the beginning of your contract, however, non-energy costs are variable and outside of the suppliers control – these are referred to as 'pass-through' charges.

What are pass-through charges?

Pass-through charges are non-energy related costs. These cover varying charges associated with transporting your energy to you, along with providing support for Government initiatives, such as climate change policies.

Energy suppliers are charged by third party companies who operate the infrastructure to transport energy. These charges are passed on to you and account for approximately half of your energy costs. During peak periods these costs can be more expensive and fluctuate depending on the market.

Supporting Government schemes that generate renewable energy and mechanisms to maintain security of supply are also chargeable.

Why choose a pass-through energy contract?

Pass-through energy may be suitable for businesses that are not averse to credit risk and do not require a fixed payment to manage budget. If you would like more involvement with your energy contract with the potential to spend less, a pass-through contract could be what you need.

Benefits:

• Should prices fall, your business will benefit, not the supplier

• Lower costs, as you would take on the risk of fluctuating prices

• No fixed tariff restrictions

• Ideal for clients who can manage usage patterns to avoid expensive periods of time

Risks:

• Supplier costs can fluctuate, which are then passed onto the end user

• Lack of budgetary control

• Cost estimates do not provide guarantees of future prices

• If you consume energy during the peak periods, you will be subject to higher charges

• More complex contract

Take advantage of the ever-changing energy market with a flexible procurement energy contract by spreading the risks associated with energy purchasing. Ideal for commercial businesses who spend over £100,000 per year on gas or electricity.

What is a flexible procurement energy contract?

A flexible contract allows large commercial businesses with high energy spend to take advantage of a volatile energy market, capitalising on market rises and falls by using energy traders to purchase energy on your behalf.

Why choose a flexible procurement energy contract?

If you're spending over £100,000 per year on energy, require a flexible contract whilst minimising energy costs, a flexible procurement could be the answer to your commercial energy needs.

By understanding your business usage and needs, the right strategy is devised to use trading expertise to optimise against the market price. Price optimisation is achieved through flexibility with energy traders purchasing your gas or electricity directly from the wholesale commodity market. You'll often find lower rates are secured and the restrictions of a fixed contract elevated.

You'll be provided with reports on trading performance, along with cost forecasting to ensure you're kept informed and in control.

Benefits:

• Flexibility to take advantage of fluctuating energy prices

• Spread the risk over multiple purchase points

• Gives your business complete control over energy purchasing

• Ongoing help and support of experienced industry professionals

Risks:

• Involves complex purchasing decisions

• Detailed knowledge or the energy market is essential

• Requires large tradable volumes to access the wholesale market

• Open to exposure if your account is not managed properly