Businesses facing rising energy bills have been invited to fight back by combining their collective purchasing power for a better deal on gas and electricity contracts.
Collective energy purchasing can deliver better value, according to the government, which has launched a new consumer guide. Energy secretary Edward Davey, said, “I want to help make collective purchasing become a permanent feature of the UK energy market. This can be a really useful tool for consumers by making it easier to move to a better deal and to get real savings on gas and electricity bills, as well as helping boost competition.”
Independent energy intermediary ENER-G Procurement (www.energ.co.uk) is making the benefits of collective energy purchasing available to organisations of all sizes via its new ENER-G Collective service, which enables companies to combine their consumption and benefit from more competitive contracts in the live wholesale market.
ENER-G recruits and groups individual businesses together into purchasing consortia, providing different collectives for gas and electricity contracts, and for both large half hourly metered customers and those smaller consumers without half hourly electricity meters.
ENER-G can also set-up collective energy purchasing schemes on behalf of trade organisations, housing associations, or membership groups.
With the consortia in place, ENER-G’s analysts then constantly monitor the wholesale gas and electricity markets to make purchases when market conditions are most favourable. Purchasing is aligned with a detailed risk management strategy that supports decision making and sets pre-defined risk limits.
As part of its management service, ENER-G handles all supplier liaison, purchasing and administration, and provides a full invoice validation service to ensure accuracy of billing.
Collective purchasing also allows small and medium sized businesses the opportunity to move from old fixed price terms to new style flexible contracts, which can be better value for money but are, otherwise, only available to larger buyers. By purchasing flexibly, businesses can buy ‘little and often’ to take advantage of market dips and spread the purchasing risk.
Mark Alston, general manager of ENER-G Procurement, said, “Gas and power prices increased by about 20% in 2011 and are predicted to continue rising year on year, but there are always opportunities to buy in short term dips even when the overall trend is up. The new ENER-G Collective enables businesses to combine forces to increase their buying power and to benefit from flexible purchasing options, irrespective of their individual budget.”
Although traditional fixed price contracts offer the advantage of budget certainty, they can turn out to be poor value for money as they only represent market prices at a single point in time. Since the energy market is extremely volatile, this can prove to be the wrong time to buy, especially if companies fail to secure a new contract well in advance of their renewal date. Another advantage of flexible purchasing is that it reduces risk for suppliers which can be passed onto customers via lower risk premiums.
ENER-G Procurement is an independent energy purchasing specialist and a founding member of the Utilities Intermediaries Association (UIA), the trade body that ensures the highest standards of operation in energy procurement. ENER-G Procurement operates the Chamber Utilities service on behalf of British Chambers of Commerce and is the delivery partner for a number of leading membership organisations, such as EEF, The Manufacturers’ Organisation.