energen

energy management

Energy Procurement (Free initial cost appraisal)

Energen offers a free initial appraisal to all new business customers. Energy procurement is a specialist area. Energen has undertaken competitive electricity and gas purchasing for industrial and commercial consumers for a number of years since de-regulation of the markets. By going to the whole of the market, we help our clients to purchase their gas and electricity at more competitive prices and to manage their energy contracts effectively, always aiming to obtain the best value rates.

Energy Procurement - Overview

The UK's increasing dependence on energy imports means that energy is now subject to a range of price influences, particularly the oil-linked gas price that is common in Europe. The key pricing influence for electricity is the balance between generator supply and consumer demand, but set within the framework of the New Electricity Trading Arrangements 2001 (NETA) and the more recent British Electricity Trading and Transmission Arrangements, 2005 (BETTA). Oil prices are themselves linked to economic growth, geo-political events and market sentiment. This has led to volatile energy pricing in recent years, making life unpredictable for the energy buyer. Other drivers may simply include the weather! For example, low temperatures in winter influence short-term gas prices and hot summer conditions affect short-term electricity pricing.

Risk management and hedging are practices increasingly being used within the energy procurement arena. An organisation’s capacity for risk can be balanced with the potential rewards of using such techniques. Common examples of hedging are simply fixing energy prices on the forward markets by entering into fixed-price contracts. More complex hedges would include more flexible contracts or buying energy options. Other common ‘physical’ hedges could include pro-active load management, changing production patterns to suit favourable pricing structures, the use of alternative fuels or simply outsourcing operations that have an energy impact. Delivered gas prices include the wholesale cost of the gas itself, National Grid transportation and metering charges set by the Office of Gas and Electricity Markets (OFGEM), Climate Change Levy (CCL), and the supplier’s profit margin.

Delivered electricity prices are more complex and include the wholesale cost of generated electricity (including CO₂ emissions costs), transmission and distribution charges (again set by OFGEM), system losses, a High Distribution Cost Levy (HDCL), an on-cost for supporting renewable generation sources - the so-called Renewables Obligation (RO), settlement charges to cover wholesale data collection and billing costs, CCL, and the supplier’s profit margin.