Risk Managed Flexible Energy ProcurementA range of flexible energy contracts to suit different business needs
As Award Winning business Energy Consultants, we provide a fully risk managed flexible energy contracts procurement service to large energy intensive users.
Or we can combine your business into a portfolio or energy basket product with other like-minded companies that are looking to have the ability to spread energy purchasing decisions throughout the life of the contract.
Thus, taking advantage of market conditions and helping lower costs and reduce your energy spend.
Which ever approach works best, we analyse your non-commodity costs to create a baseline cost and layer target wholesale energy costs on top. We then use this to discuss a risk strategy that best fits your business requirements and agree an action plan to target market opportunity’s.
Flexible Energy Contracts or Flexible Basket SolutionsLearn about our approach to managing flexible energy contracts and choose your approach
Standalone Flex Products
For those with sufficient volume >20GWh or more we can build and design an energy contract that fits your companies appetite for risk. We can tailor a purchasing strategy during a risk management workshop and build a be-spoke solution to fit your business needs.
Providing access to wholesale energy market prices for customers with annual consumption less than 20GWh by combining customer spend into buying groups. Low, Medium or High risk strategy’s can be adopted and combined with a choice of non-commodity price options.
Business Flexible Electricity and Gas Baskets
Flexible Energy Contracts
Flexible procurement is an alternative way to purchase energy that allows organisations to take advantage of the ups and downs of the wholesale market.
It involves tracking the wholesale market and purchasing smaller chunks of energy throughout the length of a contract.
The aim is to buy during price dips and avoid purchasing during price spikes or when adverse market events are shorter term.
> Direct access to the Catalyst energy command desk, and in depth market insight and access to a high volume product for low-volume users.
> No cross subsidy of non-commodity costs – for example, distribution and transmission costs.
> Half-hourly and non-hourly meters under one single contract.
> 36-Month framework, which means that wholesale energy price risk can be effectively managed further ahead and removes the need to tender annually.
> Flexibility for site additions, and removals, with the ability to add sites and harmonize energy contracts.
> Position reports and performance reports at a frequency that suits.
> Long-term energy price risk can be swiftly managed.
Flexible Basket Contracts
Our energy basket arrangements allow our customers to combine their energy requirements with other similar sized companies and pull together a total combined energy spend.
This can either be on a traditional fixed price basis or on one of our flexible basket arrangements.
We have a number of basket purchases covering various dates throughout the year so we are always able to combine energy spend with other existing purchase groups that we already manage.
This can be a combination of single sites or a group of sites, and this type of solution provides access to a more transparent product choice and access to wholesale energy trading solutions that are risk managed for your personal business requirements.
Plans allow for both gas and electricity, and contracts can be combined to provide a single neutral end date called a co-terminus contract.
Sites can be added or removed from the overall account and initial energy usage patterns are assessed along with the right risk management purchasing strategy for your business needs.
From this information a decision is made to purchase directly from the wholesale market on a ‘flexible’ supply contract.
The Alternative to Flexible Energy Contracts - Fixed Energy ContractsThe Potential Drawbacks of Fixed Procurement
Historically, fixed energy procurement is the more traditional approach to energy purchasing. The main advantage is that the energy price is fixed for the contract term, providing budget certainty. Despite providing a more cautious approach to energy purchasing, fixed procurement can have some disadvantages:
1. Timing – If you lock into your next fixed energy contract on a single market day, you lose the opportunity to gain access to improved wholesale pricing further down the line.
2. Risk Premiums – Suppliers face risks associated with your supply contract in terms of volume variations, credit risk, and especially non-energy charges, such as transportation charges and green taxes. To cover this risk they add a premium to your prices, which usually increases with the length of your contract. These risk premiums are significantly reduced through a more transparent method of buying energy.
3. Are all elements fixed? Do not assume that all costs are fixed under a fixed contract. Most suppliers’ standard terms stipulate in their T&Cs that they can ‘pass through’ any increases in non-energy costs, such as transportation charges or green levies, to customers during their contract.
The biggest benefit apart from avoiding market highs, is the opportunity to make multiple purchasing decisions during the life of the agreement and the ability to take a longer term view at managing market risk. We constantly review energy purchasing 12-months in advance for our flexible energy customers.
Flex Basket Contracts
In the energy basket, non-energy costs for example can be fixed 100% on an annual basis. They are then reset annually just before the anniversary of the contract meaning that the price you pay on circa 60% of the total energy bill is more reflective of what is should be and contains less premiums.
Our Capability & Live Market Price Access
Our ability to monitor energy markets and trends is second to none. At Catalyst we pride ourselves on the investment made to deliver flexible solutions to our customers. Complexity does not phase us. Every customer needing a tailored flexible energy contracts 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 of the key features of our capability are listed here.
Live Energy Prices
> Live access to electricity and gas market prices
> Live access to oil, carbon & coal prices
> Daily energy and commodity news bulletins
> Detailed supply and demand fundamentals
> Weather forecasts
> Expected imports and exports
> LNG data
> Exchange rates
> Wind and solar forecasts
> Live access to gas storage injections and withdrawals
> National Grid data
> 5 years + worth of wholesale energy price trends
> Live non-commodity reporting
> Build your own base-line figure for comparing supplier options
> DUoS charges split by time of day
> TRIAD costs and avoidance benefits
> Metered and un-metered reports
> Historical analysis and previous contract analysis
> 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
> Invoice validation is checked against the actual stored published
> Risk premium considerably reduced with un-bundling energy charges
> Plan ahead with 3-year frameworks and remove the need to tender annually and speeds up the process of managing long term energy price risk
> Ability to add or remove sites
> Shaped product reduces the risk of trading the residual aspect if desired
> Ability to re-forecast volume during the term of the contract so when energy is bought it is as close to your usage requirements as possible
> Quarterly review of the energy strategy and risk policy, according to the conditions of the markets at the prevailing time
> Support in the compilation of energy papers for reporting to the board
Our Innovative flexible energy contracts solution can offer a range of enhanced benefits such as smart tariff technology and blended demand side response purchasing services.
Managing Risk Exposure - Optimized Purchasing Framework
Risk Management Strategy Workshop
When a flexible contract is awarded with a supplier following on from a comprehensive end to end flexible tender process, Catalyst 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.
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 as each business adopts an approach that suits their business needs.
It is important to recognise how fast energy markets can develop and opportunities can exist within a short time-frame. Catalyst 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 an organisation.
We do not speculate on positions and try to second guess the market but we do fulfill and deliver on an agreed plan of action.
Price Tactics and Execution and 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.
On behalf of customers, Catalyst 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 to arrange a meeting or discuss methodologies used.
Catalyst 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 to arrange a meeting or discuss work and process flows associated with the execution process.
Flexible Energy Contracts - Flexible Electricity and Gas
Although Flexible Energy Contracts have been available for many years, traditionally energy contracts for gas and electricity are fixed price contracts set over the term of the agreement. The prices for a fixed term contract are calculated by averaging out all of the fixed and variable costs over the length of the agreement.
However over recent years suppliers have looked for more ingenious ways to capture customers attention with new and innovative products that allow a customer to spread some of the risk associated with going to the market in one go, as is such for a fixed price contract.
Be-Spoke Flexible Contracts
Generally the reasons why most businesses opt to choose a fixed price agreement is that it eliminates any risk associated with gambling on the price of the wholesale energy market and provide budget certainty over a period of time.
Indeed if the market is at a low point and future prices are expected to rise, then a fixed term contract can be very appealing as it would protect a business against these rising costs.
However in a falling market the opposite can be said and many companies have been forced to lock into a market at a higher point only to watch prices slide beyond there original contract prices.
Flexible Energy Contracts Explained
If we look at the analogy of the mortgage market for you home then the securing of an energy contract is very similar. Some people prefer to have some price protection over a set period of time, whereas others prefer to take more risk and take a gamble on the market working in their favor.
Either way what ever approach you take either low risk or high risk, it has to be the decision that you are most comfortable with.
The same is true in your business buying decision and you have to be comfortable with your company’s attitude to risk, and if these types of products are right for you.
Over the last few years many suppliers have introduced a range of flexible energy contracts mainly suited to larger consuming customers, because of the complexities associated with managing these types of products.
However flexible energy contracts provide the ability to spread energy purchasing decisions over a period of time, and to spread some of the risks associated with large commercial purchases.
The basic idea of a flexible energy contract is the ability to have complete transparency over the component parts that make up your final energy bill.
They allow you to fundamentally separate the delivery and distribution costs from the cost of purchasing the energy at wholesale prices.
In the most basic of flexible contracts you would simply lock away all of your fixed costs at the start of the contract such as delivery, distribution and cost to serve.
You would then purchase your energy requirements for future delivery such as purchasing 6-months in one go, followed by additional 6-months at a later date.
By purchasing your requirements on the wholesale market allows you to see the true cost of energy required on a month by month basis and the greater the benefit the higher the associated risk.
For example it is possible to purchase energy today for delivery tomorrow, but imagine what would happen if there was as sudden failure of the supply network or an unforeseen political event, which would immediately impact the market, you would be forced to buy the energy required at what ever the market price was.
That’s why it’s always advisable to have a planned risk strategy for your business and a procurement policy that clearly defines your method for purchasing, and how you can minimise the risk associated with not buying a fixed price contract.
How to Obtain Flexible Energy Contracts
We have a range of flexible energy contracts and wholesale energy contracts on offer to ensure that even the most diverse requirements can be met. Our experienced team will work with you to asses your requirements, recommending the type of flexible energy contracts most suitable for your business requirements.
> Allows you to select your supplier but not have to entirely commit to current price levels
> Allows for more advanced purchasing strategies
> You become more responsive to market movements
> Allows you access to near term markets including day ahead purchasing
Flexible Energy Contracts Summary
With our flexible half hourly energy contracts you can join an energy portfolio of over £1 Billion of delivered energy. Traditionally reserved for those companies with a minimum energy consumption of 50GWh per annum, it is possible to trade your commercial requirements as a commodity in the wholesale market, much in the same way that traditional energy suppliers buy from this market at the moment, to supply energy direct to its own customers.
However by combining the consumption of a number of businesses in a portfolio arrangement, sometimes called an energy basket, we can trade this portfolio as a notional company and thereby bringing the advantages of the wholesale market to much smaller organisations.
Please contact us to discuss your flexible energy contracts requirements as these types of contracts are limited and are only available to businesses that consume over £150k a year.
They are available for both gas and electricity and they will allow you to be more responsive to changing market prices throughout the year and as such, reduces the risk of fixing all of your volume at a time when prices are at a peak.
Please contact us to discuss our full range of flexible energy contracts for your business. As a market leading business energy broker we can offer a comprehensive choice of flex energy contracts and flex gas contracts to suit your commercial requirements.
Is Buying Flexibly and in a basket an Option for my Organisation?
> Your organisation does not have to be spending millions on energy to be able to access flexible purchasing.
> The volume thresholds have substantially reduced over the last few years.
> Flexible procurement is available to organisations using over 20 million kWh (20 GWh) of energy.
> Organisations using less than or up 20 million kWh can join baskets to combine their consumption with other client groups so the overall consumption is large enough to access the considerable benefits of the flexible approaches, so size is no longer a constraint and the ability to buy in small phases over a period of time is available.
> Flexible procurement does not have to be complex; companies can buy ‘with a fixed mentality’ e.g. buying energy once a year but doing so within a flexible framework. This gives the ability to change the buying point if the market increases or decreases, offers slightly lower premiums, access to additional product benefits, and a consultant constantly watching the market, using forecasts and technical analysis.
> Whilst flexible procurement is not for organisations who demand 100% budget certainty, it does allow risk to be capped with parameters in the purchasing strategy to protect budgets and minimize any overrun.
Flexible procurement allows you to purchase energy closer to the date of use, reducing the risk premium you pay with fixed contracts. It can be substantially reduced if you have a flexible product which can ‘pass through’ non-energy charges.
Fixed, transparent ‘pass-through’ charges
In the past a key benefit of fixed contracts was, as the name suggests, the certainty of one fixed price for the contract duration. However, as mentioned above, most fixed contracts allow the non-energy element of the price to be ‘passed through’ to the customer if those elements exceed the supplier’s original expectations, so customers often see increases in their energy ‘tariffs’ during their contracts.
With a flexible procurement contract, these non-energy charges can be fixed or passed through at their published rate, and clearly itemised on bills.
This not only allows clearer visibility of what is being charged, but also allows you to compare each supplier’s non- energy costs when it comes to contract renegotiation time.
A long-term energy strategy
When setting up a flexible procurement framework, a 3 year energy strategy will often be devised. This will take a long-term view of the energy market and allow your organisation to do the same, assisting with long-term energy budgeting and forecasting.
Your energy strategy will also consider your organisation’s objectives, such as budget or cost savings, and all purchasing decisions can then be made based on this plan.
Unlike traditional fixed price decisions where you are buying to a calendar date of renewal, you can instead take a strategic view of your purchasing decisions.
Digital Flexible Energy Solution
Your energy flexible energy contracts purchasing, position reporting, and budget control and forecasting are all accessed through your online digital platform.
1) With the Risk Management module you have access to tiny clip size purchases which can be as little as 0.002MW, with no limit to the number of transactions a customer can make.
2) With no Volume Tolerance, your business has full flexibility, as your business grows, you can add or remove sites as you wish, without incurring any additional fees, allowing you the freedom to optimise consumption to drive down costs with no limitations.
3) Purchase Energy at the true market rate, with no hidden margins or premiums of any kind. All of the costs are reconciled to industry rates.
4) Get Peace Of Mind with a completely transparent supplier with fully itemised, drill-down digital bills. You can view every charge that makes up the total, and find new ways to reduce costs. Our rates are verifiable, giving customers peace of mind.
5) The Budget Control and Forecasting module is also totally transparent, with each cost itemised. The format can be tailored to suit you, so it’s easy to compare with other suppliers.
6) Our Evergreen Contracts allow us to never lock customers in to multi-year contracts. Our contracts are evergreen, so customers can stay for as long as they like without having to renew. Leave whenever you wish, with just 90-days notice.
How we Boost our Customers’ Competitiveness
To compete in an increasingly challenging environment, customers need to find new ways to optimise flexible energy contracts purchasing and track budget performance.
Using advanced energy data analytics and the digital technologies provided by the EaaSi platform, Catalyst can leverage your consumption profile data to break costs down to 30-minute intervals and then build this back up from hourly, daily, weekly, monthly or per annum.
Challenge Conformity and Traditional Billing Problems
As an flexible energy contracts user you understand the complexities of the wholesale energy market, the myriad of 3rd party costs and the lack of transparency when it comes to how you are charged for all these component parts that make up your final bill.
Despite improvements over the years billing is still a major issue for large users, as bills are often difficult to understand and despite the best efforts of suppliers still arrive weeks after the energy has actually been consumed.
Our live dashboard provides you with 100% cost transparency, the ability to access everything upstream at cost price, including wholesale energy market prices and all in real time.
Revolutionary Flexible Energy Contracts Purchasing
Our service allows customers to test our product for free before deciding whether its right for you and fits your requirements.
Again unlike any other energy supplier we are able to take your historical energy consumption, profile and shape the data for pricing purchases and then provide a live pricing quote based of the current commodity and non-commodity charges.
This provides you with a live reference price for bench-marking and comparison purposes updated as market prices change.
Your account login provides access to a range of analysis tools and modules so you can evaluate the platform or appraise an existing flexible energy contract offer already in place, or even use the platform to validate an existing provider or invoice.
As this data can be rolled backwards or Algorithmically profiled to roll forwards we are able to demonstrate one of two things.
1) Using your previous contract sign date we can accurately tell you what you could have had, if you had used this platform to buy your current energy contract.
2) We can provide a transparent and accurate budget forecast for future horizons based on live energy market prices.
So no more having to wait for offers to arrive from suppliers and simply refresh offers at a time that suits you.
Don’t Presume this Product is just for Major Energy Users – For the first time ever we can provide a solution normally only accessible to the very few large energy users and make this functionality available to all half hourly companies regardless of size.
No More Validation Costs – Such is the extent of billing issues in the UK energy market that it has spawned an entirely new generation of companies whose main service is providing validation services to check that suppliers are actually billing customers correctly. This solution removes the need to validate invoices as all invoices are automatically collected and validated against the set contract prices.
Such is the confidence in this product that there is no contractual tie in, and customers have the freedom to leave at any point, placing the emphasis on service and delivery firmly at the very heart of this product.
> For the first time ever we can provide a solution normally only accessible to the very few large energy users and make this functionality available to ALL companies regardless of size.
> Providing you with 100% cost transparency, the ability to access everything upstream at cost price, including wholesale energy market prices, with no hidden margins, and a clear transparent management fee.
> Such is the confidence in this solution, that there is no contractual tie in and with the ability to try before you buy, you can easily benchmark your existing provider and compare prices with our mark to market forecasting module.
> And for those customers who have the flexibility to shift their load can further benefit from our smart pricing structure.
> This new service vows to be the most transparent, honest and innovative energy provider you will ever use.
Disrupt Your Energy Purchasing Perception
If you want to challenge yourself and your organisation to be more creative and innovative and challenge how you pay for your energy, you have to remove all preconceived notions about how the UK energy market works.
For nearly two decades suppliers have been nothing more than billing aggregators, collating various regulated delivery charges, environmental taxes and wholesale energy costs, who then add a margin on top as a cost to serve, all before sending the actual final invoice to the customer.
History has shown us that because of the extreme complexities of this process, and the evolution of charges over the years, that suppliers don’t always get this right, or even worse add additional risk premiums onto some of these 3rd party charges.
There is a distinct lack of flexible energy contracts transparency when it comes to how a customer is billed even with the most open of suppliers or detailed billing, and is often accepted without challenging because of the complex nature of the market.
Digital Disruption of Flexible Energy Purchasing
In an industry that is over 20-years old, technology is advancing at such a pace that for the first time ever the technology has surpassed the process it was supposed to be supporting.
Smart data can now create a full visual pricing transparency and this clearer understanding enables better buying decisions to be taken.
These insights enable customers to now manage and purchase energy in ways that simply where just not previously possible.
This total cost would include all of the non-commodity charges and access to flexible wholesale energy purchasing, delivered all at the market prevailing rate, with 100% market price transparency.
This level of data is so powerful and so intuitive that it allows end users to uncover opportunities for performance improvements, as well as energy and cost savings through clearer buying signals.
Optimising Performance to Drive Savings
With advanced analytics and sophisticated algorithms its possible to ask a multitude of what if questions from the platform to improve performance such as;
Q1. What if I was to shift demand, how would it affect my energy price?
Q2. If I avoid red band DUOs charges what will it save me?
Q3. What do my TRIAD charges look like next year?
For customers also able to harness the power of demand side response schemes or have available load to shed the platform also has a built in market savings module.
A significant amount of investment has gone into the web based platform with further ongoing enhancements constantly planned. Both the code and the platform supporting the solution are at the cutting edge of current technology, and it’s this unique combination that delivers the fastest most reliable solution on the market.
Desktop, mobile and tablet formats, also allow for on demand experience and thanks to mobile and tablet technology, it provides consumers with the power to directly connect from the palm of their hands.
Direct Access to Wholesale Energy Markets – Our platform provides access to the wholesale energy market and allows you to buy all or part of your future energy requirements at any point. Take advantage of current prices as the wholesale market changes, so you can purchase at the right time, and at the right price to make real cost savings.
Additional Modules – We’ll provide a suite of modules and analysis tools, information and industry insight to help you purchase your energy more successfully. Including 100% transparent pricing, detailed market reporting and direct access to real-time market prices.
Risk Managed Purchasing – Your dedicated Account Manager will work closely with you to make sure you’ll get the most from our platform and provide additional valuable insight into what’s happening in the energy market. We’ll also keep you up to date on how your current buying strategy is performing with full market and buying reports.