Energy budgeting: more important and difficult than ever

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The founder of the famous consulting firm Mckinsey & Co, James Mckinsey, first highlighted the importance of budgets as not just “a ledger activity” but a business tool around which a company should be based writes Dorian Nineberg, chartered accountant and managing director of Pulse Business Energy.

As a result of reforms such as EMR, energy budgets will inevitability increase and become more complex. Many new taxation costs will be passed on mid contract each year. Budgeting for these charges is going to become much harder and a specialist skill. Simply inputting figures from the contract will not lead to an accurate budget.

Good financial energy budgeting and planning will require:

  1. A thorough analysis of the predicted usage, supply costs, existing taxation schemes like the CRC and pending taxation schemes like CfD
  2. Coordination of this budget throughout the business as a whole.
  3. Preparation of budgeting data showing the actual and estimated performance of the budget.
  4. Strategic and skilful budget management to deliver costs within the predicted budget each year.

With energy costs becoming a bigger player in the balance sheet each year, the success and failure of business targets will rest more and more on getting the energy budget right.

At Pulse we see our role as your remote resource for professional budget planning. Our budgeting tools meet the standards of leading accountancy firms and cover all the possible contingencies when it comes to energy budget management.

Look to Germany to get a heads up on gas prices

In the UK Energy Traders take pride in our gas market (NBP) being the largest in Europe and the market to watch when it comes to predicting pan European prices writes Alex Randall, head of energy trading at Pulse Business Energy. However, in December last year the German gas market took over the UK’s position as the largest gas user in Europe. Subsequently, this year I have found it more and more insightful to view live gas prices in Germany to get a KPI on the UK market.

The appetite for gas in Germany seems strong in the medium term. Continuing tensions in Ukraine could still lead to gas sanctions in Russia and depletion of German gas reserves changing the dynamic again. However, in the interim continued monitoring of German gas prices alongside UK prices provides a great insight.

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