08/09/2014

By Jen Sena, Customer Service Director, Opus Energy


SMEs looking to lower their energy costs should look no further than the domestic market for great ideas. There is a growing trend in the UK energy market for energy consumers to join together in collective purchasing agreements, known colloquially as ‘basket deals’, whereby they use their mass buying power to negotiate the best energy prices with the energy suppliers.

What is an energy basket deal?

Many small businesses buy their energy in the same manner as a domestic purchaser. They select a fixed price contract for a set term, usually one, two or three years. These types of contracts make it easy for the SME to manage their budgets, but they don’t allow them to take advantage of any favourable fluctuations in the energy market.

Purchasing energy directly from the wholesale market requires a level of expertise and time commitment that most SMEs cannot afford. In many cases, it falls to the business owner to fit energy purchasing in among all of their other duties.

An energy basket deal allows SMEs to join together and collectively pool their buying power and gain access to the pricing opportunities normally only available to a large energy consumer. There are two types of baskets available. The first allows the group of SMEs to buy their energy frequently, so they can take advantage of any fluctuations in the market price. The second uses the fixed price model and locks in the lowest bulk purchase rate available at the time.

What should a SME consider when joining a basket deal?

There are four things a SME owner should keep in mind when evaluating a basket deal:

1. How strong is the organisation promoting the arrangement? SMEs should opt for the deal that is likely to have the highest number of participants either overall or of similar businesses.

2. Who will be responsible for negotiating the energy price? Business owners should make sure that the person speaking with the energy supplier or the wholesale market is very knowledgeable and well-positioned to negotiate the best energy prices available at the time. Some of them may even provide other value-added services such as energy audits.

3. Which supplier will provide the energy? SMEs should make sure that they’ll be able to quickly and efficiently reach a customer service team member that can answer questions and resolve any problems.

4. When can they join in? Business energy contracts cannot be ended without giving the proper notice to the current supplier. If an SME owner is not sure when their current contract ends, they can check their invoice or phone them up to make sure they will be able to switch to participate in the basket deal.