Electricity – a buyer’s guide
you to benefit should prices fall. The flip side is that you
are also exposed to price increases.
When it comes to electricity procurement, a basic
knowledge of the industry can make a big difference to
the price you pay. The following is offered as a guide to
help you get the best deal.
Pass-through charges
Around 45% of the cost of electricity is overseen by the
Energy Regulator, including NIE’s network charges,
various market charges and levies. These are the same
for all suppliers who usually treat them as ‘pass
through.’
Climate Change Levy (CCL)
CCL adds around 4% and is set by HM Revenue &
Customs. It is possible to avoid some/all of this levy if
you have a Climate Change Agreement (CCA) or by
buying ‘green’ energy from approved renewable and
CHP sources.
One solution may be a ‘hybrid’ option which offers the
benefits of a variable price deal but with the option of
fixing costs for an agreed ‘window’ during the contract
term. These options are generally only available to
those using high volumes of electricity.
A little homework
To help with your decision making it’s always best to
gather some basic information. A quick web search will
tell you what happened to wholesale electricity prices
last year and what the forecast is for the coming year.
You will also need to review your production plans and
forecast the amount of electricity you expect to use in
the coming year.
Wholesale energy and supplier costs
The remainder of your bill is made up of wholesale
energy and supplier costs. The final price you pay will
depend on your procurement strategy and the finer
details of your contract with your chosen electricity
supplier.
Wholesale electricity is traded between generators and
suppliers in the all-island Single Electricity Market
where prices vary every half hour depending on supply
and demand and the price of fuel in world markets.
Fixed or Variable Price?
Fixed Price deals offer some stability for the duration of
the contract. However they usually carry a premium and
if your timing is not well judged you risk being tied to out
of date prices that are higher than the market rate. You
also may incur penalty charges if your consumption
changes significantly.
A Variable Price contract that tracks the wholesale
market gives you more flexibility on volume and allows
You may also wish to do some price modelling to
assess both the risk and benefit of choosing a Variable
Price contract.
You will also have to factor in the impact of any energy
saving/renewable projects planned for the coming year.
Added value
It’s always good to establish the price difference
between ‘green’ and ‘brown’ energy and if you can get
a better deal for a longer contract.
Lastly it’s also important to establish what after-sales
support you will get from your supplier and whether
they offer any energy saving support or advice.
Procuring electricity may seem a little daunting but
hopefully the above gives you a few pointers on how
best to proceed.
Next steps
To get a quote from Power NI please fill in our online
form here or call 028 9068 5042.