BIU works in partnership with Npower to provide a basket solution to smaller I&C and public sector customers with energy spends between £200k to £2million, including the NHS. This allows smaller customers to take advantage of a risk managed electricity trading strategy and pooled purchasing power on a flexible energy purchasing contract, whilst retaining budget certainty via a stop loss that sits above the market price (which if breached, we will purchase 100% of the exposed volume). As 100% of the basket volume is purchased prior to the start of the 12-month delivery period, we can ensure that customers have the ability to know their costs for the next 12-months, thus having the ability to budget based on the market cap in place for the next 36-months, whilst providing them with the opportunity to track prices lower with the aid of the dynamic floor and deliver overall costs below budget.
Many customers were caught out by signing fixed price contracts prior to the large price falls of 2015 and early 2016. Customers with energy spends in this bracket are often pushed into signing fixed contracts regardless of the outlook for wholesale market prices in order to fit in with a broker’s business model. This is a purchasing methodology our company has shunned. We are keen to develop year-round relationships with all of our customers, including our fixed contract customers, as opposed to a one-off yearly tender process regardless of wholesale market dynamics. This allows us to interact with customers and reduce their costs from all angles.
RESULT: Our basket customers significantly benefitted as our strategy tracked market prices lower whilst making small hedges as we saw price risk prevailing. This saw the basket achieve a wholesale price of £42.49/MW for the October-15 annual period and £42.33/MW for the October-16 annual period. An example of the savings achieved on wholesale costs is shown by the reduction in the wholesale costs paid by University Hospitals Morecambe Bay NHS Trust who saw the wholesale proportion of their invoice fall by circa £125k, eradicating any pass though charges increases and resulting in a reduced energy bill for the trust.