What is Energy Procurement?
Energy procurement is a process where a business, or a third party, identifies, sources, and agrees on the supply of energy for commercial purposes. This process also includes wider utility supplies like water. The aim of energy procurement is to get the best deals for the business as well as the most suitable including opting for renewable energy options.
Business Utilities
There are many ways a business can source and pay for its utilities. In many organisations they have historically worked directly with commercial suppliers but we offer a different way. As a business utility broker, we do all the hard work for you in terms of finding suppliers and setting everything up. But we do so much more than that, we also have years of experience in commercial utilities and energy buying so we know when to buy and from where as well as when to change supplier, how long to agree contracts for and so much more. Using a commercial utility broker is not just convenient it can save a huge amount of money for your business too.
Energy and Utility Buying Experts
Our friendly and experienced team is waiting to help you find the right energy and utility deals for your business. In these unpredictable times, it can be almost impossible for a business to find the right deals. Getting the right company to look after your utility procurement is key to getting the right prices and deals. The difference between a good deal and a bad one can mean the difference between business growth and having to make savings and cuts. Eneco offers a utility and energy procurement service that will take the stress away from this process leaving you to grow your business without worrying about utility prices.
We have over 20 years of experience in procurement and every aspect of commercial energy. This means we have great relationships with a wide range of suppliers from gas, water, and electric as well as renewables. Not only that but due to the volumes we deal with we have a lot of buying power. This means your business utility procurement process will not only be well managed you will also get the best prices and most favourable contracts. We work with each client’s utility requirements, usage, locations, and more to make sure you are treated as a unique organisation and get the best deal.
Eneco will source the most cost effective supply solutions for your commercial gas meters.
Since water de-regulation, Eneco can source the best water and wastewater supply contracts for your business.
We use our twenty years of experience to guide your business through the complex electricity market.
Eneco have trusted relationships with over 20 suppliers to connect you to the best market prices available.
Energy Contracts
We can offer fixed, flexible and basketed supply contracts tailored to your organisation’s risk profile.
Energy Market Information
Our comprehensive market reports covering wholesale pricing, industry pass throughs and government regulation allow you to make well-timed procurement decisions.
Non-Energy Costs
We keep you updated on the latest environmental and industry charges built into your bills.
Energy Contracts
Eneco can arrange fixed, flexible or basketed contracts dependent on your organisation’s approach to procurement risk. In simple terms, an organisation with a low risk appetite that wants complete budget certainty will need a fixed price contract. Whereas, you may be willing to take more risk and fix your energy costs over a period of time through a flexible contract. Our experienced consultants will be able to talk you through the process and tailor your procurement strategy to your unique requirements.
Fixed Energy Contracts
Fixed contracts mean the price you have agreed to with your chosen supplier is fixed on the date of signing throughout your contracted term, which is usually between one and three years. This can be altered to suit your businesses needs if, for example, you want to have a targeted end date to tie a new meter into your existing contractual arrangements.
Using our expert knowledge of the energy sector, we will closely monitor the market for the optimum time to purchase energy and minimise your exposure to wholesale price fluctuations. Eneco’s approach ensures you get the most competitive prices available.
Basket Contracts
Basketed contracts are group purchasing arrangements which are priced on a fixed or flexible basis and put together to bulk buy supplies with the objective of individual members securing a lower contract price than they would on their own. Eneco can tailor fixed or flexible priced baskets for specific groups of clients based on their unique requirements. We do not offer generic baskets as we do not believe they are in our clients’ best interests.
Flexible Energy Contracts
Flexible energy contracts enable businesses to take advantage of fluctuations in wholesale prices by purchasing gas or electricity over a period of time. Flexible energy purchasing can be a daunting prospect, but our highly experienced consultants will guide you through the process and tailor the purchasing strategy to suit your business needs.
How Can You Benefit From Fixed Contracts?
Entering your business into a fixed contract enables more accurate budget projections providing stability and ease of mind. This reduces administration time so you can concentrate on other aspects of your business and let us look after your utilities.
Please be aware, there are still areas of the contract which are subject to price change such as gas transportation costs, pass through charges and Climate Change Levy. Details of these can be found in our non-energy costs.
How Can You Benefit From Flexible Energy Contracts?
The wholesale market’s fluctuations offer opportunities to acquire energy at lower rates and can generate considerable cost savings in comparison to fixed price contracts in some cases. Your consultant will make all energy purchases in line with an pre-agreed risk and purchasing strategy tailored to your company’s requirements and track performance in regular position reports.
Approaches to Flexible Purchasing
Energy Market Information
Eneco send out fortnightly market reports detailing updated wholesale market costs pass through charges and other energy market news. In addition to tracking a number of live futures markets, we receive daily pricing updates from suppliers which are used to track customer costs to advise the right point to sign off.
See our News feed to view the latest fortnightly report.
How Can This Benefit You?
Factors Influencing Wholesale Markets
- Maintenance – Gas and electricity infrastructure requires maintenance periodically, whether planned or unplanned, will impact available energy supplies.
- Demand – Periods of high demand, such as for heating in Winter or air conditioning in Summer, will typically result in higher prices.
- Oil Markets – These feed through to gas and electricity markets on a 6 month lag.
- Coal Markets – Coal is used to a lessening extent in electricity production.
- Wind/Solar Output – Changes in wind/solar output will affect prompt markets.
- Weather – Seasonal changes in weather affect demand levels.
- Gas Storage – Impacts gas supply levels particularly over Winter when demand is highest.
- Carbon Costs – Feeds through to wholesale generation costs and hence prices.
- LNG – Liquid natural gas supplies are increasing globally and form part of the UK gas mix.
- Exchange Rate Fluctuations – Oil and coal are traded in dollars. Carbon allowances are traded in euros. This means exchange rate fluctuations will amplify any changes on those markets.
- Geo-Political Events – The markets are very sensitive to global events which may have an impact on demand or supply levels.
Non-Energy Costs
Non-energy costs comprise environmental taxes, wholesale distribution and transmission costs that are issued from the Government and Ofgem and are then passed through by your supplier and built into contracted electricity rates. These costs are updated quarterly/bi-annually and cover around 60% of your electricity bill.
Various Elements Included in Non-Energy Costs:
Renewables Obligation (RO)
This is a levy imposed on suppliers who support large-scale renewable electricity generation. The government places an obligation on all licensed electricity suppliers to source a proportion of electricity supplied to customers from renewable sources. All suppliers in England, Wales and Scotland are affected by the charge. The RO came into effect in 2002.
The RO charge for 2020-2021 are 0.471/MWh.
Transmission Network Use of System Charges (TNUoS)
the TNUoS covers the cost of using the transmission network and recovers the cost of building and maintaining transmission infrastructure. This usually increases annually as demand increases. This is a tax from National Grid.
Balancing Services Use of Systems (BSUoS)
The BSUoS reflects the costs of balancing the system, such as running the national control room, frequency response arrangements and other ancillary services. These charges are based on the volume of energy put onto or taken off the transmission system in a half-hour period. These costs will increase as we increase our reliance on renewable energy sources, unless we can develop a large scale system to store electricity for when it is needed.
Climate Change Levy (CCL)
The Climate Change Levy is an environmental tax charged on the energy consumed by commercial users. It is designed to encourage businesses to be more energy efficient in how they operate and reduce overall emissions.
The CCL is paid at either the main rate or carbon price support (CPS) rate. The CPS is a discounted rate which is for businesses who own generate their own electricity.
CCL rates for the financial year commencing 2020:
0.811p/kWh for electricity
0.406p/kWh for gas
Distribution Use of System Charges (DUoS)
The DNUoS covers the cost of using the distribution network which is your local network e.g. UK Power Networks. The costs charged recover payments for installing and maintaining these networks. Your charge is based on volume of electricity used, which is passed through the Distribution Network. Rates vary depending on your region, as well as time of day, and are represented by a Red, Amber, Green scale of charges. You can identify which rates apply by finding the ‘Line Loss Factor’ for your site and looking it up on your DNO’s scale of charges.
Feed in Tariff (FiT)
This is a government programme designed to promote the uptake of small-scale renewable and low-carbon electricity generation technologies. It is an incentive to pay businesses and property owners who generate on-site renewable energy through small scale projects. It was introduced in April 2010 and requires participating licensed electricity suppliers to make payments on both generation and export from eligible installations. FiT payments are made based on meter readings taken by energy users. The FiT scheme was closed to new applicants from 31st March 2019, but existing installations will continue to receive FiT payments as previously agreed.