Flexible or fixed term? Some people prefer a fixed price agreement because it eliminates any risk associated with speculating on the price of the wholesale energy market and provides budget certainty over a period of time. Others are willing to take more risk and bet on the market working in their favour. For them flexible energy contract provides the ability to spread energy purchasing decisions over a period of time and to spread some of the risks associated with large commercial purchases.
Basically, you simply lock away all of your fixed costs – such as delivery, distribution – at the start of the contract, You would then purchase your energy requirements for future delivery, for example, purchasing 6-months at once, followed by additional 6-months at a later date.
By buying on the wholesale market, you can see the true cost of energy required on a month-by-month basis. However, a sudden failure of the supply network or an unforeseen global event, such as Fukishima, might have an immediate impact the market, and you would be forced to buy the energy required at the going rate.
At Energy Prices Direct we understand the complexities associated with managing these types of products. We can advise on a strategy for your business and a implement a procurement policy that clearly defines your method for purchasing, and how you can save money whilst minimising the risk associated with not buying a fixed price contract.