Why business should choose flexible utilities contracts over fixed

Chris Hurcombe: Fixed isn’t actually fixed.

Intent on disrupting the marketplace and transforming old legacy systems and approaches to energy spend management, Catalyst is leading the charge with a digital platform that will provide businesses with more control and insights into their energy consumption and costs.

It’s Energy Spend Management platform – EaaSi™ which is powered by Robotic Process Automation (RPA), is a cloud based solution that automates the entire procure-to-pay and validation process.

EaaSi makes financial and procurement teams more efficient and saves both time and money when compared to more traditional approaches. While in the midst of an uncertain market and the effects of the pandemic, this approach to energy spend is more important than ever. Why? Because Catalyst believes that the fixed and flex contracts marketplace is set to change for good and digital forecasting will be crucial.

Currently, many businesses opt for fixed contracts over flex for security. However, Catalyst predicts that fixed-price energy contracts for industrial and commercial businesses are set to get more expensive – and far less ‘fixed’ than consumers believe.

Fixed-price contracts currently carry a 10 per cent price premium compared to flexible contracts. Catalyst predicts that premium will rise to 15 – 17 per cent in 2021, and beyond 20 per cent from 2022.  These increases could see the demise of the fixed-price contract as suppliers struggle to predict consumption patterns and attempt to insulate themselves from risk. There are also too many unknowns for suppliers to price fixed contracts accurately, so they are doing everything possible to de-risk contracts. This will mean any margin in terms of under or overconsumption is quickly becoming a thing of the past. Credit requirements are also going up and some suppliers are not pricing for certain industries without an upfront deposit or a significant price premium.

This predicted rise in fixed price contracts will open the doors to more flexible contracts in a post-Covid world and ultimately offer more benefits to business.  This is the opportunity for businesses to harness digital technology to alleviate any concerns they might have about the unknown of flexible contracts. The risk of flexible contracts is omitted once visibility on energy consumption and spend is clear, which can be clarified via Catalyst’s digital EaaSi platform as it enables the business to recognise the benefits of flexible contracts over fixed price contracts.


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