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Do you need an energy procurement consultancy?

6 Mins

Many companies have found that instead of trying to decipher all this information themselves, it’s often better to employ the services of an energy broker or consultant.

The Utilities Intermediaries Association suggests asking yourself four questions to help you determine if you are better off managing your energy needs alone or enlisting the help of a broker or consultant:

  • Do I really have the time required to do a thorough job?
  • Is energy a large part of my cost base, or could I be usefully employed running my core business?
  • Do I have the in-depth knowledge to make a cost effective deal? and
  • If the deal goes wrong, would I know how to get it back on track?

If you are completely satisfied with your current supplier, have a long-term fixed contract and/or understand how to monitor and analyse the wholesale energy market, you may be OK to continue administering your own energy contract. If you are still unclear whether to hire an energy broker, here are five ways one can help your business.

1. In-depth market expertise you may not have in-house

Think about the professional areas your business currently outsources. Depending on your size and type of organisation, you may employ outside legal counsel, accountants, IT consultants, or marketing agencies. You do this because it’s either difficult to hire this expertise on a full-time basis, or because you found you can save costs by outsourcing it. 

So why treat your energy procurement any differently? Does the in-house person responsible for your energy procurement have the time or experience to review all the different energy tariffs, read through and understand each energy contract’s small print, keep abreast of changing government legislation and look for ways to lower energy consumption?

2. Strategic direction

Energy brokers do more than just find the lowest cost energy. A reputable broker uses market knowledge and energy purchasing experience to save you time, money and resources by:

  • Compiling data to approach the supply market;
  • Searching the market for the most suitable gas and electricity contracts for your business;
  • Giving recommendations to guide your choice of new contract term, supplier, rate structure, etc;
  • Guiding you as to the drivers in the wholesale market to choose when to buy;
  • Negotiating prices and contractual terms on your behalf, clarifying terms and conditions;
  • Obtaining credit clearance; and
  • Setting up and managing multi-site contracts.

3. Finding ways to reduce consumption

Larger brokers and energy management consultants can help you use less energy and reduce carbon consumption by:

  • Highlighting inefficiencies
  • Suggesting technologies to improve efficiency, such as lighting and building controls;
  • Cross referencing times of high consumption with supply costs and exploring demand-side management options; and
  • Helping you finance and install on-site renewable and low carbon energy generation.

4. Handling the complex task of energy procurement

About 30 companies supply energy in the UK. Among them are the Big Six, which dominate the market, but also a number of smaller, specialist business-to-business suppliers. Some of these companies offer just electricity, others electricity and natural gas, and still others offer a full range of utilities, including telecommunications. Knowing which supplier has the right expertise and commercial requirements for your business is a complex task.

Energy brokers are dealing with these complexities on a daily basis and are therefore able to analyse the energy market and provide detailed feedback on your best options in as much detail as you require.

The final complexity is timing – this is arguably the one element that can make most difference to costs for business energy users. As wholesale energy prices constantly rise and fall, monitoring the market for dips can make a difference of thousands of pounds. Large energy brokers will have the market intelligence resource and wholesale market monitoring software to enable customers to lock in at advantageous times.

5. Management of supplier contracts

Last year, energy ministers suggested that energy companies had overcharged household and business customers by more than £600m in the previous five years. Also last year, a third of respondents to a survey by the Association of Convenience Stores claimed they had been charged for gas and electricity they had not used, while 25 per cent were sent back-dated bills demanding thousands of pounds extra, and in some cases were charged up to £15,000 more than they were told to expect by their suppliers.

Energy brokers will monitor your supplier contract and bills to ensure you are being charged the right amount for the energy you use. And if disputes arise, your broker can help resolve the matter on your behalf.

In addition, brokers stay ahead of the fast-changing world of the deregulated energy market by keeping track of regulatory changes, the latest technological advancements and new charging structures.

Nick Linklater is the Head of Corporate Accounts for ENER-G

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