Free Guide Helps Businesses Avoid Costly Mistakes On Energy Contract Renewals

Online, March 3, 2012 (Newswire.com) - A free 'Quick Guide' has been launched by ENER-G Procurement, the independent energy broker of the ENER-G group, to help organisations avoid making costly mistakes on renewing energy contracts.

The guide advises organisations how to avoid falling foul of expensive 'out-of-contract' and 'deemed rates', which sting many businesses each year.

All business customers must either re-negotiate their contract or give adequate notice to terminate their services prior to a contract end date, serving up to 90 days' notice. Failure to do so can result in over-inflated, uncompetitive 'out-of-contract'' or 'extended/deemed rates' until a new deal is struck.

With the busiest spring electricity renewal period fast approaching, ENER-G is advising organisations to act now to avoid financial penalties and the prospect of being locked in to an uncompetitive contract.

The Quick Guide explains how and why the penalty charges occur and how to correctly manage existing gas and electricity supply contracts to prevent being subject to over-inflated energy prices.
"Companies which have contracts renewing between April and July should act now to avoid potential penalties," said Mark Alston, General Manager for ENER-G Procurement.

He added: "Suppliers require between 30 to 90 days' customer termination notice to switch contract. Many businesses don't realise this and are leaving it too late. Most organisations faced a 20% increase in renewal costs last year and the upward trend continues, so there is a clear financial imperative to test the market in an attempt to mitigate potential cost increases."

ENER-G is advising businesses to set financial plans based on 15% plus year-on-year increases in power unit costs through to 2020. The say that prices increased by about 20% in 2011 and could double by 2020.

Mark Alston says that businesses should develop a robust procurement strategy to buy at the best possible price. He advises: "Consider which contract suits your business, whether it's a fixed, flexible or multi-site agreement, or a flexible capped-price product. The wholesale energy marketplace is very volatile and energy prices constantly rise and fall. This presents opportunities to buy when prices dip, but equally a substantial risk of paying a premium during a peak, especially if purchasing is left until the last minute and falls within the months leading up to the April or October contract renewal buying periods.

"Consider using an independent energy consultant to monitor the wholesale market place for you and either find opportunities to lock into prices at a market trough, or manage a flexible purchasing approach within a clearly defined risk management strategy. If using an independent broker, ensure that they are a member of the Utilities Intermediaries Association."

The 'Quick Guide to Out-of-Contract and Deemed Contract Rates' is available free to download from: http://www.energ.co.uk/quick-guides