If your business consumes more than 55kWh of electricity, or 200,000 kwh of gas, per year you are probably used to negotiating complex energy agreements with your supplier or broker. Your energy will be a significant business expenditure and is likely to require hands on management in order to get the best value for money.
Multi-site businesses are likely to have to deal with numerous energy suppliers, meaning staggered contract end dates a variety of contract types. To complicate matters further, energy companies have differing rates throughout the country, meaning that the cheapest company in the North West may not be the same as in the South East. Careful management is needed to ensure that your business doesn’t pay over the odds. Additionally, contract end dates need to be watched carefully, to ensure that you don’t automatically roll over into a contract that is no longer competitive.
Energy contracts for large businesses are either fixed, flexible or interruptible.Fixed contract
A fixed contract allows you to fix your bills for a selected period of time. This appeals to many companies as it allows businesses to plan for their outgoings ahead of time.
Fixed contracts usually cover between one and four years. Fixed contracts can protect you from instability in the energy market, however they can also mean that you end up paying over the odds if energy prices drop.Flexible contract
A flexible contracts allows you to alter your rates dependent on the energy market. This is a more involved process as you have to watch the energy markets, however flexible contracts do allow you to ensure you’re getting the best energy rates at any one time.Interruptible Contract
Interruptible contracts allow the National Grid and local authorities to cut off energy during peak demand periods. As you may expect, these contracts are cheaper, however they do mean that you can’t completely rely on your energy supply being available. If you choose to operate anyway, you can be charged an increased amount.Peak Day Demand
Simply put, Peak Day Demand refers to the maximum amount of energy, in a day, that you are likely to consume. For large sites this is the sum of Supply Offtake Quantity (SOQ) for each of your meters. There may be penalties for going over this number. During periods of peak demand, when the entire network is experiencing high demand, prices are likely to be higher, although this does depend on your individual supplier.