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Bespoke Flexible Contracts

Bespoke Flexible Contract

Energy price risk in the UK energy markets needs to be measured and managed in an effective and robust way that matches the energy procurement objectives of your business. Whilst objectives can vary, the most common ones are to:

  • Protect agreed budget levels.
  • Cap deviation of prices that would have otherwise been achieved in a fixed price arrangement.
  • Take advantage of intrinsic market volatility, with the aim of reducing the average weighted price of the commodity purchased and the overall energy bill

Risk Appetite

There are a number of energy purchasing strategy options available to your business and the following tactics can be employed to manage risk and subsequent expectations. These are shown for illustration only below:

Bespoke-Flexible-ContractsRisk Management Strategy Workshop

When a flexible contract is awarded with a supplier following on from a comprehensive end to end flexible tender process, Catalyst Commercial embarks on an inclusive and interactive risk management workshop with customers. The workshop allows the beginnings of the development of a risk management policy which lays out the basis within energy price risk will be effectively managed between all parties involved.

Latest Markets Trends

Through our monthly or weekly energy market reports we report on the trends in wholesale price movements and the key drivers likely to effect future commodity charges.

Principal Approach

It is important to recognize how fast energy markets can develop and opportunities can exist within a short timeframe.  Catalyst Commercial can execute commodity purchases under the predefined conditions laid out in the risk management strategy and is able to work autonomously or alongside decision makers within your organization.  We do not speculate on positions and try to second guess the market but we do fulfill and deliver on a plan of action.

Measuring Performance

Performance will be measured against the reference price used by the supplier to produce the billing rates. This is based on a market and typically when the flexible framework is agreed with the supplier.  However, there are a number of ways reference prices can be set.  The reference price is compared to the physical achieved price and the difference between the two will result in a debit or credit on the energy bill.  Should customers wish to avoid adjustments on their energy bill, a number of alternative options are available to more than accommodate this.

Price Tactics

On behalf of customers, Catalyst Commercial employs a transparent process when producing price tactics.  Triggers can protect your business against adverse market events and ensure the appropriate course of action is taken when market opportunities come about.  Triggers that protect against price rises are known as upper price triggers and triggers that take advantage of lower prices are known as lower price triggers.  Contact Catalyst Commercial to arrange a meeting or discuss methodologies used at contact hyperlink.

Execution

Catalyst Commercial monitors the short term and forward market on a daily basis and runs various position reports to determine commodity costs for each contract period.  The appropriate course of action is taken to ensure the risk management strategy is adhered to.  Contact Catalyst Commercial to arrange a meeting or discuss work and process flows associated with the execution process at contact hyperlink. 

Capability

Our ability to monitor energy markets and trends is second to none.  At Catalyst Commercial, we pride ourselves on the investment made to deliver flexible solutions to our customers.  Complexity does not phase us.  Every customer needing a tailored solution has uncompromising access to no less than three experienced energy buyers with a primary buyer assigned for details on all market related products and market queries.  Some features of our capability is listed below (non-exhaustive list):

  • Live access to oil, carbon & coal prices and news
  • European hub prices
  • Detailed supply/demand fundamentals
  • Weather forecasts
  • Supply/demand forecasts and compositions
  • Expected imports and exports between various interconnectors
  • LNG data
  • Exchange rates
  • Wind forecasts
  • Live access to gas storage injections / withdrawals
  • Correlation trends between various fuel markets
  • Daily bullish/bearish factors using National Grid data
  • 5 years + worth of wholesale energy price trends
  • Uncompromising access to an Oil economist and long term views
  • Technical analysis

Flexible Product Features and benefits at Catalyst

  • 2-3 year framework removes the need to tender annually and speeds up the process of managing long term energy price risk
  • Ability to revert to fixed price arrangement
  • Ability to add or remove sites
  • Shaped product reduces the risk of trading the residual aspect if desired
  • Ability to reforecast volume during the term of the contract so when energy is bought it is as close to your usage requirements as possible. 
  • Catalyst Commercial can assist with the forecasting volume
  • Micro clip purchasing helps to increase the number of purchase points available and spread the risk of buying energy
  • Ability to fix or float non commodity through the term of the contract or fix on an annual basis and reset close to the anniversary of the contract
  • Independent forecast of non-commodity rates up to 2020
  • Risk premium considerably reduce with unbundling energy charges and comparing these against a comprehensive list of energy suppliers
  • Attractive volume tolerance schemes
  • Various billing options; with or without flexible reconciliations
  • Performance or Position Reporting at a frequency that suits
  • Quarterly review of the energy strategy and risk policy, according to the conditions of the markets at the prevailing time
  • Uncompromising access to our strategic energy team with a primary point of contact assigned
  • Support in the compilation of energy papers for reporting to the board

Innovation

Our Innovative Energy Solutions can offer a range of enhanced benefits such as smart tariff technology and blended demand side response purchasing services.