Take Control of Non-Commodity Energy Costs

The energy market is always on the move, with businesses and consumers constantly being bombarded by a perplexing array of information and jargon. Trying to keep up with the latest tariffs, taxes and levies whilst understanding what's available in terms of renewable energy and energy efficiency measures is an arduous, if not impossible, task.

What's clear though is that costs are going up. According to a report by Inenco, one of PEPCO's expert partners, most organisations in the UK should expect their energy costs to rise by around 25% by 2020. What's interesting to note though is how much these increases are influenced by the elements of energy costs that are NOT directly related to the wholesale cost of energy.

Non-commodity charges account for more than half of a typical business energy bill which is a huge add on to the price you pay your supplier. A few examples are the Renewables Obligation Levy, the Feed-in-Tariff Levy, the Contracts for Difference Levy and the Climate Change Levy.

The good news is that, whilst we can't control what the wholesale energy market is doing, we can take some control over the non-commodity costs. Based on the facts and figures from Inenco this is not something to be ignored.

Through their expert understanding of the market and extensive research Inenco have produced a report which shows how different types and sizes of businesses could be affected by effectively "doing nothing".

The figures are startling, for example:
A manufacturing site in the South of England using 50GWh pa could see the non-commodity element of its energy bills rise by almost £1 million per annum by 2019 if it does nothing to change the way it manages its energy usage. But by implementing an Energy Efficiency Programme it could see that figure almost halved.

A small retail store in North Wales with usage of just 1GWh pa could see a 5x increase in non-commodity cost on its bills each year by doing nothing.

The Inenco report goes into further detail of a number of energy management strategies that sit between doing nothing and implementing an Energy Efficiency Programme but the figures quoted show the huge difference in cost increases at these opposite ends of the spectrum.

Clearly there is significant scope for businesses to take control and make a positive impact on rising energy costs. The first step in implementing any energy management strategy is to review your current use and projected energy costs, including non-commodity costs.

Through specialist market knowledge and the support of expert partners PEPCO have assisted numerous companies reduce their energy costs and deliver sustainable savings programmes.

Our team can deliver procurement support across all your indirect spends, including Energy. Please contact Mark Russell, 0203 008 7585 or mark.russell@pepcoservices.com, if you would like to find out more or discuss where else we can add value to your business.

Download the full Inenco Cost of Inaction Report.
*vs 2016/2017 baseline