4 Things You Need to Think About When Procuring Your Next Business Energy Contract
For many organisations, utility procurement – and finding the best possible contracts for your energy, gas, and water – is often more complicated than it should be.
Some people simply let their contracts rollover for years, continuing to use the same providers and paying uncompetitive contract rates instead of exploring options. However, choosing to do so often will result in spending far more than necessary to cover your utilities.
To help you navigate this sometimes confusing and tricky process, we’ve put together a guide designed to help you address four major areas you should be thinking about as you procure your organisation’s next energy contract.
Do You Need Renewable Energy?
Many businesses are transitioning to renewable energy all over the world to cut emissions and minimise their environmental impact. This is especially true in the United Kingdom, where according to data from the Department for Business, Energy, & Industrial Strategy, commercial energy supply was responsible for over 25% of CO2 emissions in 2017.
Now, more than ever, there are many supply contracts available offering fully certified and certificated electricity procured from sources that either produce low or no carbon.
Until recently, renewable energy contracts have often been more expensive than traditional energy consumption, but many major suppliers now offer green electricity contracts at little or no extra cost.
How Long is Your Contract?
Every business is different – and the energy contract that meets your needs at the best price may be very different from what best suits other organisations.
Contracts can be anywhere from one month to over 5 years in length, and your choice can affect how much money you save or lose on energy over time.
Short term contracts are lower risk, which typically means that they are less expensive. If you are planning on relocating your organisation or are only responsible for providing energy to a site for a short period of time, this may be your best choice.
However, you will also need to renegotiate your rate sooner than later – and fluctuations in rate may significantly affect your budgeting. You may also receive less bids for your business, and switching energy suppliers multiple times across a number of short term contracts can add to your workload, complicate how your consumption is reported and tracked, and create unnecessary administrative headaches.
A long term contract can save you hassle and frustration solely in the fact that you don’t need to renegotiate as often, making it easier to budget and plan around your energy consumption. You will also likely receive more bids from suppliers for your business. However, if market prices are peaking, you may overpay for services over time. Additionally, in the event that you move or relocate your business, you may be subject to early termination clauses or other penalties.
Do You Need Automated Meter Reading (AMR) or a Smart Meter?
Automated Meter Reading equipment eliminates the need for on-site meter readings, allows your supplier to remotely read your meter, and ensures that your bills are both more accurate and delivered on time.
For most business supplies, AMR is required. Fortunately, over the long term, this will help to cut energy waste and reduce environmental impacts, as well as save money.
If your organisation still needs to install an AMR or smart meter, this can be arranged as you procure your next contract.
When Should You Go To Market?
Energy contracts are often agreed upon far in advance of the start date in order to lock in the best possible rate, and it is in your best interest to secure a competitive rate as early as you can in order to avoid needing to agree to terms at the eleventh hour.
Furthermore, in the summer and early autumn wholesale energy prices are considerably less expensive than in the winter and spring months, when energy usage is highest, so you should plan accordingly if considering a non-annual contract duration.
If any of this sounds intimidating, there are other options available.
An honest energy broker will help you find contracts that meet your needs at the best prices possible, negotiate any necessary agreements, and use their direct relationships with energy providers to quickly and efficiently solve any issues you may have with your utility provider or service in the future.
If you’d like to find out how our Utility Bureau Service can help you negotiate your next energy contract, simply click here to schedule a free, no-commitment consultation.
Steve Clifford is Owner of Clifford Talbot Partnership which was formed in 1984 to provide solutions to energy and utility management issues in commerce, industry, government and the public sectors throughout the UK.
