EDF Energy launches 5-year fixed price contract for business customers
A major energy supplier has announced that it can offer businesses a fixed price for energy for five years, with South Staffordshire Water being the first to benefit from the offering.
In the first of its kind, EDF Energy has created a unique c.£50m contract to enable the water supplier to fix the majority of its energy costs from day one.
The contract was signed in February 2014 for a supply starting in 2015 and runs for five years until 2020 when South Staffordshire Water’s next investment cycle finishes. The contract fixes the majority of the company’s electricity costs from the day of signature, giving South Staffordshire Water greater certainty of the majority of their energy costs.
Water companies’ income is controlled and fixed over a five year period through a consultation process with OFWAT known as the Asset Management Planning or “AMP” cycle. This process agrees their income and investment over the period; protects consumers, gives investors greater certainty and ensures best management of the water network.
Energy costs are a significant part of water companies’ costs and their ability to fix these is limited by the availability of wholesale prices that match the AMP cycle. Generally, wholesale electricity prices are only quoted three years into the future.
Sid Cox, Director of the Business division at EDF Energy, said “We know that businesses are looking for ways to control costs and reduce risk. Businesses wanting to get long-term price certainty should follow South Staffordshire Water’s lead.
“Partnership with our sister company EDF Trading made this unique purchasing approach possible and I believe this industry first would also benefit other businesses that want longer-term price certainty. We are even able to offer prices out as far as 2024 from today.”
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