Our Analysis
We review below the effect of any changes on Electricity & Gas Supplies:
Electricity
Of course, by closing properties for 2 days each week will see a reduction in Electricity Consumption, there are however elements of the Supplier Agreements in place that you would continue paying, irrespective of the above.
Commercial Electricity Agreements include several non-commodity charges that are due for payment whether you consume energy on site or not. These costs included Standing, Transmission, Distribution and Supplier Administration Charges.
Furthermore, with the greatest efforts in the world, if properties were closed for 2 days, you would not be able to reduce all consumption on site as a vast majority of equipment will still need to be turned on including IT, Kitchen, Security & Alarm Systems to name a few.
With this being the case, reducing or turning off your Electricity Supply for 2 days, will not see your weekly spend reduce by two-fifths, and, depending on the agreement in place, may only make a minimal difference overall.
Gas
Commercial Gas Agreements do not include the same level of Non-Commodity Costs as Electricity, however even by using Zero Consumption for a period on site, the Daily Standing Charges will still be due for payment.
A more significant issue, moreso for larger supplies, is the Consumption Clauses included within Gas Agreements. These clauses, more commonly referred to as “Take or Pay”, mandate that you must use a certain level of Gas within a range of your required Annual Quantity (AQ), or you will be subject to a penalty invoice, depending on the suppliers terms and conditions.
The Annual Quantity (AQ) is an industry recorded figure, denoting your Yearly Usage in kWh, from readings taken and updated by your supplier, onto a National Database.
Although Consumption Clauses do exist within Commercial Electricity Agreements, they are far more common with Gas and any significant changes in usage may see a large invoice be due at the end of your current agreement. Furthermore, due to these charges, it may make no difference to remaining open for a full 5-day week.
Our Summary
In summary, although there is an appeal on the face of it to close Schools & Academies for 2 days a week to save Energy Costs, in reality this will not be the case. Any savings that could be made will only be minimal and if consumption falls to a level whereby the relevant “Take or Pay” Clauses are breached, any penalty charges would likely offset these benefits.
Is there anything Schools and Academies can do to reduce their Energy Costs, even if they are in a Fixed Agreement?
Currently, Wholesale Energy Prices are ever increasing, causing issues for Schools and Academies with current & future budgets. CostAdvice – Energy Specialists are here to help with our no obligation health check on all Commercial Energy Supplies.
Why is an energy health check important?
- Not all Commercial Energy Agreements are the same.
- Furthermore, not all businesses should be charged the same costs.
- Our No Obligation heath-check looks deeper, than just your current charges and agreements.
We recently identified £10,000 of annual savings for a group of Museums that were already being looked after by another Energy Consultant.
Furthermore, CostAdvice – Energy Specialists, through our select partners, can also help and assist with Energy Efficiency Measures including LED Lighting and Air & Ground Source Heat Pumps.
To proceed, or for further information, please contact Daniel Walker on 01246 252788 or send him an e-mail to daniel.walker@costadvice.co.uk, whereby he will be happy to help.
