Welcome to our Weekly Newsletter 21st October

Wholesale energy prices rarely move in a straight line. Prices for different delivery periods can rise or fall at the same time, reflecting changing market expectations, supply and demand, weather forecasts and wider economic developments.

For businesses planning ahead, this creates an important distinction: a change in wholesale prices does not automatically translate into an equivalent change in the contract price available to your organisation.

Understanding your renewal date and the structure of your existing agreement can help you assess market movements in the context of your own energy requirements.

Here are five considerations for businesses reviewing their energy position.

Look Beyond the Headlines

Headlines about falling or rising energy prices rarely tell the whole story.

Wholesale prices vary depending on when the energy will be delivered. A contract covering the coming winter may be influenced by different market factors from one covering spring or summer 2027.

Rather than focusing on a single price movement, consider how the periods relevant to your business are changing and whether they align with your anticipated renewal date.

Understand Why Gas and Electricity Prices Differ

Gas and electricity markets are closely connected, but they do not always move in the same direction or by the same amount.

Gas prices can be influenced by storage levels, weather forecasts, international supply and demand, and geopolitical developments. Electricity prices are also affected by generation availability, renewable output, interconnector flows and the cost of fuels used in power generation.

These factors help explain why prices for different delivery periods can show contrasting movements.

Know When Your Contract Is Due for Renewal

Your renewal date is one of the most important factors in planning your energy procurement.

If your electricity or gas contract expires within the next 12 months, reviewing your options early can give you more time to understand available purchasing approaches and assess how they fit your business.

Early preparation also helps avoid leaving important decisions until the last minute, when time for reviewing terms and comparing options may be limited.

Review Your Total Energy Costs

Wholesale prices are only one part of the overall cost of supplying energy to a business.

Standing charges, network costs, policy-related charges, consumption patterns and the terms of your contract can all influence the amount you pay.

If your energy expenditure has changed, reviewing the full breakdown can help you identify the main drivers and establish whether your current arrangements remain appropriate.

Build a Procurement Strategy Around Your Business

There is no single approach to energy procurement that suits every organisation.

Some businesses prioritise budget certainty, while others may have greater flexibility around purchasing decisions. Your energy consumption, cash flow, operational requirements and tolerance for price changes should all be considered when reviewing your options.

Rather than attempting to predict every market movement, a structured approach to contract planning can help you make decisions that reflect your business priorities.