Electricity, like Gas, is traded on a world market. Prices will reflect events, both natural and manmade, in far flung parts of the world. All suppliers buy off the wholesale market and resell to make a profit. They have to buy a proportion at spot (on the day) as well as forward months & even years ahead, so current events do not always allow a change in UK prices.
The UK market is split into two major areas Residential (Domestic) or Business (Commercial). The terms of engagement, are totally different in each case and need to be understood. Each area is split into the type/size of customer and the capacity for risk.
First decide which one of the following types of customer you are:
There are separate rules for each type. Ignore media hype which has brain-washed the population into thinking comparing prices or working them out is difficult. It is not. Go back to basics, and remember cost and benefits are separate.
In 2004 I was responsible for buying business energy by the half hour and decided to investigate the residential market for my home energy.
The brief to myself was simple – do the exercise once and find a supplier I could trust long term with consistent fair prices (not just the cheapest as they are usually short term).
It took me 3 months to find my trusted supplier (because there are any number, not just the big six) and have used them since 2004 with excellent service and customer support at all times.
Copywrite prohibits me putting the name or link on my own web site but I would be happy to email this. Click here to request it.
Commercial energy is in two major parts – those who buy electricity by the half hour and those who do not. At this stage renewable energy is left on one side as this is a separate and specialist field.
Half hour billing customers should be working direct with a specialist company or energy provider to manage their risk and times when it is used. i.e. can production times be moved from a high price time/s to cheaper/cheapest times. This area should always be on the CEO’s desk not left to some hard pressed member of the business to make the decisions. For large businesses it is vital and requires a dedicated person with direct reporting into the CEO or Board.
Monthly/Quarterly billed customers (traditional meters) should first go to the existing provider for prices. Once obtained use a broker to place the business usage for tender in the the wholesale market. The many energy providers, not just the big six, will decide if it fits in with their portfolio of business they wish to supply. The brokers use a matrix of prices which the suppliers publish for trading to be done. They are liable to change at any time and some are only valid for 24 hours.