What’s the right way to fix your business electricity prices?

Are your business’s electricity costs more than a few thousand pounds a year but not in the millions? Then “how should I fix my prices” is a question you’re likely to ponder when a renewal offer for your next electricity contract lands on your desk. Along with, “and how do I know I’m getting a good deal?”

It’s an important question to answer correctly. A bill in the tens or hundreds of thousands of pounds is resting on it. That’s not an incidental cost. In fact, electricity costs and the contract you choose can have a material impact on your company’s results. Probably not make or break, but enough that can’t replaces can in statements like ‘we ____ invest in that new equipment / system /person / training’.

So how do you know when you’ve spotted the best deal? Especially if buying electricity for your business isn’t something you do very often? After all, even a bill in the hundreds of thousands of pounds sometimes isn’t enough to justify a full time role for electricity purchasing.

Before I give you the answer, first take some comfort. You’re not alone if you feel electricity buying isn’t as simple as you’d like it to be. Our research suggests lots of people find it quite challenging.

Why is it so challenging?

Here are two reasons why:

1.  (in)Frequency: Reviewing business electricity contracts and prices is not something most people do very often. Full time energy buyers exist, but normally only in businesses with bills in the millions of pounds. For most people, evaluating business electricity contracts is hard. For instance, prices can look similar at first glance but actually reflect different price structures and have different exclusions.  And the offers tend to come with lengthy, complex terms and conditions.

This market’s quirks can even test professional procurement people that don’t necessarily specialise in energy. For instance, understanding the way some regulated costs such as renewable energy incentives are set (some in advance and others retrospectively) and how these risks transfer into the prices and contracts you’re presented.

2.  Jargon: I won’t deny it – the business electricity market is awash with jargon.  It’s fair to expect to find some unique technical terms with something like electricity, but in this market there’s loads of jargon and acronyms.  A lot of it exists simply to label the many different processes and parties involved in getting power to your business. DUoS, TNUoS, BSUoS, Volume tolerance, Renewables Obligation and so on.  Check out these snappy plain English explanations of wholesale electricity prices, delivery charges, and renewable energy costs, and you’ll see it’s a case of ‘it’s easy when you know how’.

So don’t be put off. Finding a good deal for your business is an important responsibility. Approach the task in the right way and you can find the best deal and keep your sanity.

Keep your sanity with the 3D’s of Energy

There’s a quick way to become an informed part time energy buyer. It’s by using our new decision making tool – The 3 D’s of Energy. This breaks down the challenge of finding the best fixed price contract for your business into 3 simple steps.

1. Discover what makes up electricity prices. You’ll find short simple explanations of important factors like those renewable energy incentives and confusing terms like those acronyms.

2. Determine which elements you’d like to fix in your contract. This step gets you thinking what kind of fixed price your business really needs from its next electricity contract.

3. Decide which contract is right for you with complete visibility about how fixed the prices are and what you can expect.

At EDF Energy, we like our customers to be informed buyers. (Watch this to see why.) We hope the 3 D’s of Energy leads you to the right contract for your business and helps you feel better about the process.

Next time an electricity contract renewal offer lands on your desk, try it out. We’d love to know what you think of it.

Posted by Philip Valarino, Senior Manager, Business Sales

Phil Valarino heads up EDF Energy’s Business Sales. The team undertakes an extensive range of contracting and account management activity across a broad spectrum of B2B customers, both in UK and Europe. He has over ten years of experience across the energy industry having held various positions across Sales & Marketing both in the UK and France.


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