PURCHASE ENERGY WITH CONFIDENCE
Purchasing energy at the optimum time is critical, especially for a large multi-site business, as buying at the wrong time can lead to overspends running into the thousands. Since future energy prices are likely to be determined by a purchasing strategy put in place now, it is essential to find a strategy that fully takes into account a company’s need for budget certainty and view of risk. DEP can provide a solution to fit your needs.
DEP offer a complete end-to-end managed service for electricity and gas purchasing. We employ experienced energy traders to track the wholesale markets across all the main energy exchanges, so we always know when prices are at their peak highs and record lows. As we are completely independent from the energy suppliers, we can impartially advise who presents the best deal and why. However, our substantial buying power and positive working relationships with the energy suppliers means that we always obtain the most favourable prices based on the current market.
Analysing real-time pricing for the energy markets across the UK and Europe is just the beginning. Our dedicated energy purchasing team also use industry-leading trading platforms to study the various other markets that affect energy prices, such as oil and currency, to get the most comprehensive and accurate energy estimates possible. In addition to these platforms, our team also have access to cutting-edge news and commentary, technical analysis techniques, statistical models and other tools, which allow them to provide clear views on why market movements occur and what future movements are likely to be. So the client can always make an informed decision, we consistently provide clear guidance in respect to contract lengths and suppliers, along with our views of the forecasted energy market. We will provide our recommendations, but the decision to choose the contract always lies with the customer.
We offer procurement packages in two forms: flexible and fixed price.
Flexible Price Energy Procurement
With flexible price energy procurement, the price you pay for energy will alter over time based on the ever-changing energy market. Our specialised risk management team carry out regular strategy workshops to establish financial objectives, risk parameters and market engagement rules specific to each client. We have extensive experience with the LEBA broker platforms and the energy market exchanges across the UK and Europe; this ensures we identify all opportunities to mitigate price risk. In addition, the team also utilises up-to-the-minute energy industry news, technical analysis and statistical models to provide clear views on market behaviour and what future movements could be.
It is the risk management team’s job to regularly monitor market prices and purchase energy when it’s at its lowest for a predetermined amount of time decided by you: monthly, quarterly or seasonally. By establishing your financial objectives, we will ensure there is as little cost risk for you as possible and make sure you are always aware where you stand with your energy budget.
DEP has more than 2.5 TWh of energy risk managed within flexible contracts. Last year our team were able to deliver verifiable savings for our pool of flexible clients in excess of £15m, as well as successfully managing their risk throughout periods of sustained market volatility.
Fixed Price Energy Procurement
DEP understand the intricacies of the energy market from our many years dealing in both electric and gas trading. The best way to have complete budget certainty is to agree a fixed price energy procurement contract, as the cost will remain the same for the length of the arrangement. We have years of experience working as a third party with all the major energy companies, and we are extremely trusted within the industry. We utilise these connections to make sure you get the most cost-effective energy contract possible.
DEP will test the market on your behalf. We will investigate the tariffs, negotiate with the energy suppliers and present all the options to you, ensuring you benefit from the most practical energy agreement. Our findings will be laid out in an easy-to-understand report, detailing in-depth information on each supplier and your potential energy savings. What’s more, we are always available to consult, both during the decision-making process, and after the contract is agreed with our regular energy market commentary and independent reports.
The Tender Process
Energy suppliers’ prices are based on risk, so by providing as much accurate data as possible, we can minimise this and achieve keener prices.
A full tender document will be issued to every chosen supplier once agreed with the client.
We will compare all offers on a like-for-like basis, regardless of the complexity of the offer made. Any supplier option can be compared, from traditional ‘day and night’ offers through to more complex ‘energy only’ offers across 14 time bands.
When the bids have been received they are analysed and inputted into a league table, showing the comparison of your current costs, both as a £-cost and difference to all final offers made.
Supplier re-bids continue until both the client and DEP are confident that the lowest prices are being made available.
Board level considerations
As it is now commonplace for the final energy contract choice to be decided at board level, our softer approach takes away the pressure of requiring a quick decision. Whether a final verdict is reached one day or two weeks after, only then are the lowest suppliers asked to re-bid so that the chosen contract prices can be locked in.
At this point other considerations are taken into account such as supplier history, reliability, terms and conditions, and any other value-added services.
Post tender management
Once agreed, we will work closely with your supplier to ensure that the transfer is as smooth as possible and that it has been set up in the supplier’s billing system correctly and according to the agreed rates.
How Does Credit Insurance Play its Part?
In recent years, purchasing options have changed to such a degree that energy suppliers are even more selective with their prices; this is highly dependent on the credit ratings available.
An energy supplier must have credit insurance in place before being able to price any client unless they have exemplary credit history with good profit margins. Currently it can take as little as company accounts being filed late at Companies House for a high risk to be perceived by the credit insurers.
As the energy suppliers are already making very low margins, increased credit insurance fees mean that they are becoming even more risk adverse and so this risk is often passed back to the client by way of higher prices or requiring security deposits.