Juvo Energy — Supply Contract Pitfalls

Supply Contract Pitfalls

5th January, 2022

I found myself listening to the radio recently, where the topic of the morning was the impacts of high energy prices on the UK economy.  Interestingly the owner of a medium sized food manufacturing business was interviewed and explained that their company had called their energy supplier to ask for help to mitigate their exposure to the exceptionally high prices, which was putting extreme pressure on the business.

What I found alarming, was that the business found it necessary to put in place a longer term fixed price contract, which lowered the electricity price in the near term, and increased it in the far term.  The company felt it necessary to lock in more of their energy at the top of the market, and didn’t seem to fully understand the other options open to them to manage their exposure in the short term.

I think this shows how unprepared we have all been for the recent price rises, and also the lack of understanding around all of the options there are available to manage risk and fluctuations in energy pricing.

So what might be the other options?