Businesses can expect new policy costs added onto their energy bills according to the Head of Direct and Technical Sales at npower.
Ian Preston said this is why his firm has just released a new tariff which factors in “future policy costs”.
He told ELN: “In the past, new costs have come in and surprised people.”
With Electricity Market Reform changes unfolding, there’s more of this to come.
Mr Preston explained: “There are new costs coming down the line, that if you were to stick with the old tariffs, you could capture them under the generic ‘catch-all of ‘any new costs will be passed through, etc, etc’. But that doesn’t really help our industrial customers in the way that there’s something coming down the line they don’t have a clue to how much it will be, how it will impact their bottom line.”
The recently launched two-pronged tariff varies for different fuels. Fixed: Certainty Gas can be fixed for 36 months and Fixed: Certainty Power for 24 months.
Mr Preston said: “Fix the costs now so you know where you are in your budget, your bottom line, you know what your costs are going to be as long as you consume what you expect.”
If there are any totally unexpected extra costs, the supplier may put the bill up – more like an “act of god clause”, he explained: “The tariff includes what we believe will capture all costs that are likely to come along.
“But there’s a change of government next year, who knows, they may decide to do something radical, we need some sort of insurance against it wiping out any margin. We don’t want to supply energy at a loss.”
Businesses can be proactive about managing their energy use, he said, by reducing load at winter peaks, “an expensive time of year to use electricity”.
He added: “Understand where you’re using energy. It’s an old twee saying but the cheapest energy is energy you don’t use. That’s where I’d focus.”