Beond were recommended to TEX by another client in 2008. At the time they were looking to renew their energy supply contracts but energy prices were at all-time high levels. They believed that the price risks were on the downside but their incumbent energy suppliers would only provide with them with minimum 12 months fixed contract.
Beond set out to explore the market for alternatives to the 12 month fixed priced offer available from the incumbent and we agreed to run a transparent tender to compare all fixed price offers against the available flexible product that had been launched for the mid-user energy market.
TEX used Beond’s reverse auction process to assess all their available options. The auction drove the competition down to a 1.4% discount against their incumbent fixed price contract using a flex contract (if it was fully locked away for 12 months on the day of the auction). However, Beond had calculated a potential 15% saving could be achievable from risking spot prices over the following year, even if the forward market prices remained at the current high levels, but with further upside if the market fell.
Understanding the risks and rewards available allowed TEX to make an informed decision to access spot market prices whilst risk riding the prices down from their current high levels.
The net result was a cost saving of 10% from using the reverse auction and risk management process.
“I am very happy that we chose Beond to source our future power requirements as we believe that this has enabled us to keep rising costs down to a minimum.
Beond’s recommendation of a flexible purchasing contract with spot prices option helped us avoid high prices and I am very happy going forward to extend this contract for a further two years.
The level of quality, the process and the expertise of advice given during all discussions has been first class and has made things very easy for us to understand.”
Chris Varley, Managing Director – TEX Plastics
This case study shows how modern procurement techniques and understanding the risk rewards within the energy market can help businesses avoid higher running costs.
Beond continue to work successfully with Tex Plastics advising on the latest risk hedging strategies, contract issues and energy management opportunities.
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