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Electricity: a buyer's guide

Help to get you the best business electricity deal

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

Almost half of the cost of electricity is overseen by the Utility 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.’ Some suppliers quote ‘energy prices’ only so make sure to include the pass-through charges when comparing offers.

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.

Climate Change Levy (CCL)

CCL adds around 4% and is set by HM Revenue & Customs.

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 However, they usually carry a premium and if your timing is not well judged you risk being tied to out of date prices that are higher than the market rate.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 to benefit should prices fall. The flip side is that you are also exposed to price increases.

One solution may be a ‘flexi’ 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.

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 or 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. Our Business and Farm customers can upgrade their contract to Green Energy and get 100% renewable electricity with zero emissions.

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.

Energy efficiency products

Install energy efficiency products in your business and avail of around 20% funding through Power NI under the Northern Ireland Sustainable Energy Programme (NISEP). To find out more, visit our energy saving products section.

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