Energy buying can be made more efficient

As power price rises of 90% hit commercial customers, energy consultants have estimated that industrial businesses are losing out on GBP100 million savings on their energy bills

As power price rises of 90% hit commercial customers, energy consultants have estimated that industrial businesses are losing out on GBP100 million savings on their energy bills.

Suppliers are passing down the cost of oil and gas price rises to customers, resulting in soaring costs for industry.

However, with 25% of commercial contracts due for renewal in April, experts claim as much as 10% could be saved through better contract-negotiation.

National energy consultancy, Energy 2000, says that in spite of this potential for massive cost savings, most businesses are still trying to manage their energy in-house, and ignoring expert advice from energy experts.

One simple step that businesses could take is to improve their electricity buying, which is seasonal with higher costs in the winter than the summer.

Tactics can be adopted to mitigate some of the potential prices hikes by taking advantage of this seasonality.

For example.

* An industrial business could elect for an irregular contract period, so that the period of supply takes advantage of the different rates available in the market for different times of the year.

This could give them substantially cheaper rates than a straight 12 month contract running April to April.

Very simple advice, but not many industrial companies are following it.

Since the market has become so volatile, it has become impossible for those without expertise and daily monitoring of the market to negotiate contracts by themselves.

However, most businesses are still relying on in-house energy managers with little expertise of the market to negotiate this minefield for them.

Neil Williams, Director for Energy 2000, says this is a false economy: "Through contract negotiation alone we estimate that those industrial businesses with contracts up for renewal this April could save GBP100 Million, by employing the right expertise.

We have already made significant savings on energy bills for many of our industrial customers, and in most cases we've been able to save thousands more than they could have achieved on their own".

In addition to contract negotiation, there are a variety of techniques that can be adopted by industrial customers to reduce their operational costs, including energy efficiency, bill validation and Climate Change Levy rebates.

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