Office - Flexible Energy Contract

April 4, 2017
Flexible Energy Contract

A large multi occupational office customer was looking to try and establish the best time of the year to commit to a new fixed price contract. They wanted to secure at the lowest point in the market for a fixed 2 or 3 year contract to take advantage of a low price in a rising market. They needed budget certainty as they also re-charged other cost centres within the building. They had previously always selected to choose a fixed price product as that gave them the budget certainty that they needed and took a gamble as to when to secure a new contract each year for the most favorable price

We offered an options appraisal approach on the energy procurement and looked at a range of products that would best deliver to their working requirements. We proposed a flexible basket approach that would allow for them to agree a contract far in advance of a traditional contract but still allowed for budget certainty. We were able to combine their energy use with similar like-minded companies and fixed the non-commodity costs of the contract further in advance than a traditional fixed contract. We then provided a final price for the commodity part of the contract allowing the customer for budget certainty. We then had over a year before the contract actually started to better the rate the customer had now agreed to. Within a few months our risk managed approach had an ideal situation to unlock from the agreed rates to a lower price, creating a substantial saving against the agreed budget.

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