Customer Update
This latest update is specifically for customers with a procurement contract coming to an end this year. It is very important you review the information, and take note of the urgent action required in regard to your renewals as detailed below.
Throughout the year we encourage our customers to consult with us and secure their procurement contracts in advance of their renewal to avoid the risk of going out of contract, or contracting during the supplier’s peak periods. Unfortunately, this year, consumers are experiencing large increases at renewal due to the changes in the wholesale market and it has been difficult to recommend action when seeing the impact on your budgets. This has caused customers to decide to hold off and review their renewals at a later stage than normal.
This update aims to provide some information on the current market conditions and an explanation of why you may be seeing larger increases than you anticipated. Hopefully this will help to highlight the options you have and make you aware of the key dates to avoid paying more than you need to.
Markets
All commodities in the energy market are approaching new record-breaking highs causing a significant impact on consumers. This month the markets have been impacted by zero LNG imports due to cargo being diverted to the Netherlands, along with a rise in carbon prices, a reduction in gas imports from Russia due to a fire at the Novy Urengoy condensate plant, and low gas storage.
Norwegian gas imports have taken our gas storage to 48%, however, in comparison to previous years this remains significantly lower causing market concern for winter demand.
What does this mean for your renewal?
The rise in the commodity market will have a direct impact on you. It is ultimately costing suppliers more to buy gas and power, transport and meet demand. This has caused the retail market to continuously rise throughout 2021.
We’ve seen customers have no choice but to contract 60% higher when compared to their previous contract due to these conditions. This does depend on when you last signed and the position of the market at that time however we want to make sure you don’t run out of time or out of options.
The below illustrations show just how much the markets increased since May over a 12, 24 and 36-month period.
For further information and regular updates on changes in the market please visit our Market Watch website.
Renewal Options
Zenergi can provide you with various buying options for your renewal to help ensure you obtain the best possible price in this unprecedented market, however it is really important we are able to provide you with all the information in order for you to make an informed decision. We’ve provided a couple options below that are different to the standard renewal consultation process, however your Relationship Manager would love to help discuss your renewal in further detail so we can make sure you have everything you need.
Fixed Buying Group
In recent customer updates, we promoted our fixed buying group strategy. A low-risk strategy enabling businesses to procure together to drive the prices down with the supplier. This procurement strategy was attractive to those wanting to fix a price for a duration but obtain the best rate possible.
Many customers benefited from this process, and it was completed when the market was significantly lower than it is now. By giving us the flexibility to buy on your behalf we can look to take swift and decisive action to get the best outcomes for you.
Flexible Purchasing
Due to the rise in the markets, we have also seen an increased uptake in our flexible purchasing products. We currently partner with Smartest Energy and Gazprom to utilise their flexible proposition to provide our customers with a low-risk strategy to achieve a lower budget in a rising market and avoid committing to prices now.
The flex baskets enable any company of any size or sector to join and fix the non-commodity cost for the contract period. We optimise the purchase of your energy in smaller tranches throughout your contract, taking advantage of favourable market opportunities, as an alternative to accepting a large fixed increase for the next 12 months or more.
We will provide a ‘worst-case scenario’ budget based on today’s market levels, then we track the market on your behalf and purchase your energy when the market meets the strategy.
Several customers already in our flex basket have saved more than 15% on the budget initially set.
For further information on the flex purchasing products we offer, please read the attached document.
Why do I need to act Now?
You are receiving this update as you have renewal pending between now and the 30th of September 2021. If you are yet to agree to a contract you are at risk of an out of contract rate with your current supplier and we don’t want you to lose the option and leverage of being able to select the best value supplier.
It can take up to 21 days to switch suppliers. This means if your current supplier is not the most competitive, you are reducing your opportunities of accepting the best price.
You still have time to join our flex basket and spread the purchasing over a 2 or 3-year period, which could help ensure we get the best price possible for your renewal and reduce the budget initially set. Think of this as taking a variable mortgage for a period, rather than fixing at a rate you are not comfortable with at present.
At Zenergi keeping our customers updated and ensuring you have everything available to make an informed decision is our priority. The Zenergi Terms and Conditions you initially agreed to on your contract and Letter Of Authority do protect you from going out of contract because if you haven’t provided us with your termination notice or contacted your Relationship Manager about your renewal by the 10th September 2021 then we will ensure we sign the cheapest 12-month fixed contract on your behalf to secure your renewal. However, we would much prefer you to give us a call and help us select the best option for your needs, for you to sign off directly.
If you would like to discuss your renewal and the markets in more detail, please contact your Relationship Manager as soon as possible, and before the 10th September.
Positive Regards,
The Zenergi Team
