In the past, purchasing a year’s energy via a single transaction was the norm – with budget certainty high on buyers’ agendas. But with wholesale energy prices becoming more volatile, buying a large amount of volume in just one transaction may now be perceived as risky. Using a flexible contract spreads purchasing decisions throughout the duration of the contract, reducing the chance of buying 100% of your volume at a market high, as demonstrated in the graph below.
If a year's energy was purchased at point 1 the price would be fixed at that level for the duration of the contract.
Customer feedback tells us that many businesses recognise the potential benefits of buying on a flexible contract – so spreading purchasing decisions over multiple transactions throughout each contract period – but that actually making the transition can be daunting. After all, what if you don’t fully understand the market or have time to track it?
That’s why npower has developed a 3 tiered energy-buying solution for customers who feel they’d welcome some support.
Silver – Our Silver service has been developed to help you understand your own company’s risk profile and market conditions to develop a bespoke hedging strategy.
Gold – Our Gold service allows you to have a risk management strategy set within an agreed budget while allowing you the freedom of securing your energy prices directly, with our support through weekly strategy calls and Value at Risk analysis.
Platinum – Our Platinum service provides a fully supported solution. Providing a risk management hedging strategy, budget management, daily Value at Risk analysis plus the benefit of npower securing your energy prices on your behalf.
Direct Budget Management is available to fixed price customers looking to switch, and also those customers currently managing a flexible purchasing contract who feel they would benefit from additional support.
Direct Budget Management encourages the development of long-term customer and supplier partnerships, facilitating customer education on both risk management and energy purchasing. This helps to demonstrate how, with an effective strategy, the emotive element of power purchasing can be removed, while still having access to the wholesale market.