If you’re running a busy business, you probably know that energy prices fluctuate hour to hour, day to day and month to month and dread another thing to add to your workload by monitoring energy prices. It might seem impossible to attempt to keep up with the changes in prices and therefore, many just pick the first tariff that seems the best value for money.
Buying energy however, doesn’t have to be a mystery, having a sense of transparency between you and your energy adviser and energy company means that you completely understand what it is that you’re paying for, any additional charges, building a trust that they know your business needs so you can rely on them to buy your energy at the best price.
There is no simple answer to the ‘best time’ to buy energy. In reality, energy markets are fluid and are affected by lots of external factors; meaning the best time could emerge at any time. These external factors could range from weather and season, to natural disasters, geopolitical events, regulatory changes; the list goes on.
One example would be the Japanese earthquake and consequent tsunami on the 11th March 2011. The earthquake was measured at a magnitude of 9.0 and was the most powerful earthquake ever recorded to hit Japan, and the fourth most powerful in the World since records began in 1900. The loss of lives was huge; with the Japanese National Police Agency report confirming 15,894 deaths, 6,152 injured and a further 2,562 people missing. It was the 15 metre tsunami that caused nuclear accidents by disabling the power supply and cooling of three Fukushima Daiichi reactors. Gas prices rose; with 11 of Japan’s 54 nuclear power stations out of action, Japan imported more liquefied natural gas (LNG) which is essentially gas cooled into its liquid form for easy transportation. The price of this LNG rose to the highest level since November 2008 and there was a knock on effect in the UK as analysts warned of higher prices in the UK as 20% of the power in the country comes from LNG. If the wholesale price of gas increases, energy prices increase as the cost is passed onto the customer.
Don’t be caught out; many energy providers’ deals expire after a standard 12-18 months and after this time you could be moved to a standard contract which is often the most expensive way to buy energy. It can take up to 21 days to switch providers, so you need to be aware of your deals end date to get ahead and secure a new deal and avoid expensive standard tariffs!
It’s important to know what factors are currently impacting prices; and how these will inevitably change over the short, medium and long term. For instance, following Brexit, UK energy prices increased due to the market anticipating winter blackouts. ICIS’s latest report stated “the Brexit result pushed prices towards nine-month highs, due to the collapse in value of the pound, which boosted demand for British energy from traders dealing in Euros.” The UK is a net importer of coal and gas, both of which are traded in Dollars; which means higher prices long term if the pound doesn’t recover quickly.
If you are a customer of The Energy Network, we have a portal which shows you the latest wholesale pricing for gas and power which are continuously updated to allow you to get the best pricing. We are perpetually transparent with our customers, wholesale energy prices have always been somewhat mysterious to those not in the industry; we want to counter this, and help you to purchase energy for the lowest prices. Being aware of the market prices by keeping monthly or quarterly tabs on the market, you can spring into action when the market dips. We have a team of energy advisers who monitor price movements throughout the day, meaning we can buy on behalf of our customers at the best time.
If you would like to discuss further how we know when to buy energy and what we can offer you for your business energy needs; please get in touch!