I decided to write this news article as during August I met 6 gas intensive manufacturers who to put it bluntly had been well and truly ripped off by their energy brokers by encouraging them to sign new gas supply contracts on dreadful terms....
When an energy broker comes to you with a 'great' new gas contract which you 'must' sign to secure the rates and reduce your costs by 10-20% versus your previous contract just consider if it really is a good move or not. The gas market has fallen significantly over the past 12-18 months so representing a saving isn't that difficult to do.
Certainly over the past few months I have seen numerous occasions where manufacturers have signed a new supply contract on the basis that it's saving them 10-20% so a good thing to do, however the market price isn't transparent as the broker has built in considerable commission/margin in to the final price which the manufacturer ultimately pays.
Here's an example that might explain it:
Manufacturing client uses 5,000,000 kwh per annum
Current gas contract 2.5p/kwh
Current gas contract spend - £125,000
Energy broker suggest a 'great new contract' because the market is lower which you should sign ASAP as it will save you £25,000 per annum
Energy broker contract offer 2p/kwh
Forecast gas contract spend - £100,000
Using our services to fully evaluate contract terms, profile and without taking commission therefore looking to reduce costs by the maximum as opposed to building hefty margins in to the unit cost a realistic offer may look like...
Control Energy Costs contract offer 1.5p/kwh
Forecast gas contract spend - £75,000
** Whilst these costs are simplified for this article they are very reflective of what I have seen. And as such the manufacturing client isn't getting good value and the advice received is skewed towards the energy broker making as much as possible from the client.
I would encourage all Made In The Midlands members to contact me before signing any gas/electricity contracts to evaluate the value and to give you a true transparent view of options for you to then make the best business decision with all of the facts rather than a 'masked' view provided by an energy broker.
Always happy for a quick chat regardless of spend levels!
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