ENERGY MANAGEMENT
charging a percentage of costs saved or additional levies but if these pricing structures are not clarified over the contract lifetime, they could expose FMs to risks and unacceptable costs.
In a recent case, a public body with 45 locations signed up to an unmissable fixed price fee of 0.3p per kWh, but this flat pricing equated to £78,211 per year over a three-year contract, whereas a PBO’s flexible purchasing option would have saved £201,740 over the broker’s deal.
SIX QUESTIONS TO ASK YOUR ENERGY SUPPLIER
Volatile energy prices spell opportunities for big cost savings. But can FMs that aren’t schooled in procurement processes really secure a fair price? Ask these six questions to save money and seal the deal.
Can you help me get a grip on existing prices?
“REVIEWS CAN
BE CRUCIAL WITH MULTIPLE-SITE
ORGANISATIONS OFTEN RECEIVING 1,000 OR MORE
ENERGY INVOICES.”
ENERGY BILLS Another crucial, but little-known
part of planning energy deals is how to get a grip on existing pricing and billing arrangements. Many PBOs are staffed by ex-energy industry professionals, able to provide support services, such as audits of existing metering set-ups or bill validation services across the organisation’s property estate. These reviews can be crucial with multiple-site organisations often receiving 1,000 or more energy invoices alone.
One recent example saw a PBO completing two available capacity audits for a customer; by looking at four years’ data potential savings of £20K per annum were identified. This data was presented to the customer in a clear and concise report, capturing all relevant information, to enable them to make an informed decision. This was provided at no extra cost and returning all of the savings to the customer.
www.tomorrowsfm.com
Leading professional buying organisations (PBOs) have energy industry experts that can advise on available capacity reviews, provide energy bill validation services and carry out checks on the procurement. Some will even handle the whole procurement process.
Nice price – who wins?
The right supplier will provide clear information from the off about buying processes and commission charges. Make sure you understand the commission structure and any penalty clauses and ensure they are not tucked away in the small print. Some energy brokers charge a percentage of the whole price while others apply complex penalty clauses; some brokers can walk away with tens of thousands pounds in extra charges.
Is your pricing structure clear?
Like bargain-basement mortgage rates or credit card deals, energy suppliers’ marketing focuses on one
USER-FRIENDLY
FRAMEWORKS Frameworks were once hard to understand and wrapped in red tape. Today’s PBOs have listened to their customers, developing simpler tendering processes and EU-compliant documentation from the off. And that expert technical support is one of the biggest reason for frameworks delivering substantial savings on both internal resources and the energy price themselves: the framework provider has done all the legwork.
Whereas FMs and energy managers once had to organise a tender to
aspect of generally complex energy pricing arrangements. Buyers can sign up with suppliers because of a tempting price per kWh - only to be liable for big fees and penalties later.
If it looks too good to be true, it probably is.
What period do your quoted prices apply to?
Be clear about the contract’s length and if there is scope for annual pricing reviews.
If the supplier cannot provide a clear answer up-front, you could potentially be locked into higher prices or have no contract get-out. PBOs’ energy deals guarantee gas supplies at a fair price - typically over three years.
Are you EU compliant?
Make sure that your supplier agreement covers all EU regulations and do ask your supplier for customer references. A buyer that doesn’t run compliant tenders for broker or supplier deals could be leaving you open to legal challenges from competitor suppliers.
Will you still love me tomorrow?
The supplier may meet your every need now but ask if they will provide advice and support throughout the whole contract. A trusted supplier will be around to sort out price, queries and provide technical support throughout the contract – not just during the honeymoon period.
different suppliers, frameworks do all the hard yards and tick the EU procurement boxes before the buyer runs a supplier competition. Some PBOs will step in with advice and checks during procurement and some will even handle the entire procurement on the buyer’s behalf.
FMs can use gas and electricity frameworks to get a grip on spiralling energy charges, deliver substantial savings and avoid unnecessary brokerage charges. These advantages will settle any arguments over energy bills at the next management meeting.
www.espo.org TOMORROW’S FM | 39
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