Fixed price contracts only deliver a final price, with no transparency as to how that price is arrived at. LGE began by requesting a fully transparent flexible offer from suppliers. LGE broke down the current contract by component, to discover the current supplier was taking a fee of approximately £13 -£14 per MWh. LGE successfully negotiated a new management fee of £1.50 per MWH (the supplier originally quoted £2.50).
LGE negotiated a management fee of £1.50 to ensure a saving of approximately £143,702. This saving was realised purely at the contract negotiation stage, before any energy had been traded. Through a proactive, robust, risk managed trading strategy LGE capped any increases in the raw commodity cost from October 2014. Aspirational price triggers ensured that further savings are made, if and when, certain prices become available in the market. A high level understanding of the client objectives enabled LGE to implement a strategy that successfully met their requirements by giving clarity within supply contracts and ultimately reducing expenditure.