LGE have partnered with a finance and insurance company with locations in over 80 countries and over 26,000 employees to provide bespoke risk management, bureau and reporting services for their UK portfolio.
Procurement:
- For the most recent contracts, LGE deployed our cooperative procurement product which allowed the benefits of a flexible strategy despite the clients volumes being under the threshold for a standalone flexible contract.
- LGE’s policy under this product is to re-tender the portfolio regularly to ensure competitiveness year-on-year.
- Providing access to benefits of a flexible strategy allowed for confidence that competitive costings were being obtained that were in line with their agreed strategy.
Managing the Market, January 2022- October 2023:
When the client renewed their contract with LGE in January 2022 it was a challenging period with wholesale prices escalating, particularly in light of the Russian invasion of Ukraine in the following month. This meant that LGE’s traders had to be very reactive to the market. The key focus was on winter season prices given that forecasts showed historic market highs. Through LGE’s cost and consumption monitoring services, the clients volumes were analysed and it was noticed that their consumption began to drop below contractual volumes.
As a result of this, LGE’s Trading Team offered the client a strategy of reforecasting volumes for the Winter ’22 season and negotiating with suppliers the potential for selling volumes back whilst the market was at its peak, meaning the client was not over-paying for volumes it was not using and making savings through selling the volume back. This proved to be a successful strategy with LGE making notable savings
Results:
- Winter ’22 prices for the client were brought down to £54.75MWh compared to a market price of £168.98MWh when contract was signed, a difference of £114,23.
- Considering the originally forecasted volumes and price difference, this represented savings of £169,430 in the Winter ’22 season.