We are representing still more Parishes in Bradford, Bristol, Chelmsford, Chester, Chichester, Exeter, Guildford, London, Newcastle, Oxford, Portsmouth, Portsmouth R.C., Rochester, Salisbury, St. Albans, Southwark, Truro, Wakefield, Winchester and Worcester and it is an honour to be negotiating on behalf of more than twenty Cathedrals and Greater Churches from Chichester, Winchester and Salisbury to Carlisle, including Coventry, St Albans, St George’s Chapel and St Paul’s Cathedral. 2000 plus energy contracts
Gas and Electric Contract Renewals – 2013
We are recommending our clients to take long term contracts.
The Market and our reasoning
Gas in Store is at minimal levels and recently two tankers of liquid Gas had to be diverted to Milford Haven to maintain pipeline supplies in the unexpectedly cold weather. Current daily Gas prices are therefore high – and for the year ahead, higher than last year and 2011 prices.
Electricity Generating Capacity coming into 2013 had a reserve capacity of around 15%. Coal generating plants due to close by 2015 are being shut down now. By the end of 2014 generating reserve capacity will be down towards 4% -
Thus it seems that the demand for Gas will have to increase for the foreseeable future.
Shale Gas could supply up to 10% of our needs but is not likely to contribute for some years, and does not appear to be a Government priority. Some additional North Sea Gas may be drilled as existing fields are depleting, otherwise any extra Gas has to be bought from Norway or Russia or come from other world sources (North Africa, Middle East) in Shiploads of liquid gas and the price will be determined by the worldwide market.
We attended two recent Trade meetings, one with a major supplier, and both came to the conclusion that Gas prices are most likely to rise over the next 2 or 3 years and that long term contracts appeared to be good value at the time of writing.
Basket Contracts -
Basket Contracts don’t always provide the best outcome for Churches and Cathedrals, although the perception is that they should. Contracting with a Specialist Broker / Consultant operating for a Group can be more effective.
Advantages of any Basket Contract
Gas or Electricity is acquired at a Bulk price usually over a 3 -
You do nothing. All is delegated to the chosen Broker or Supplier. All decisions are made by the Basket holder. There are no annual contracts to be signed and there are no decisions to make.
There are Disadvantages to Basket Agreements
You have to commit well in advance and the chosen supplier is not open to competition.
Buying the Gas is often contracted out, thus a cost is added for this service.
You have to accept the pricing structure, which may have a heavy fixed daily charge or vice-
You cannot vary the contract term. Market conditions determine whether short or long term contracts are the most attractive. Now we are recommending 2, 3 or 4 year contracts, (in 2011 we were right to recommend 1 year only).
Many small supplies in the Basket will diminish it’s desirability to a supplier. So many of the costs that make up the invoiced price are special or fixed to each individual supply.
You lose the option to renew a contract early if the market drops before your renewal period. (At CESC we monitor the market for significant drops to seek early negotiations from your renewal date.)
You have to go with the selected supplier – and the nature of the basket can create difficulties and delays in sorting out problems with administration and invoice prices, Vat rates and addresses.
Large contracts carry a Take or Pay clause. This means that if the total amount used for the whole contract year is less than 90% (or as specified) of the annual contracted quantity, you have to pay for the Gas not used up to that minimum level. (Take or Pay is not applied to contracts under 3,000,000 kWhs p.a.)
You won’t know how much you will be paying until near or even after the start date.
The supplier may not have any experience of dealing with Church issues?
The Government Procurement Services Agreement
At CESC, we have an Agreement that enables Churches to access to a massive Bulk Gas Buying Contract run for Government Buildings by The Government Procurement Service (GPS).
This has to be the most advantageous basket available to churches.
The contract now handles over 250 million therms of Gas for instance, and has to be one of the largest tenders in the country, including a very large number of Government premises with big supplies.
Entry is usually on 1 April or 1 October. 6 month’s notice of withdrawal is required.
A number of our Church Clients are already included in the April Basket.
We remind you in good time each year that six month’s notice has to be given by 30 September should you wish to withdraw from the Basket at the end of the next March.
Bespoke contracts negotiated within a Group price structure with reliable suppliers
In our experience over nearly 20 years, Church decision makers prefer to be flexible and be able to choose the contract term and most competitive supplier that suit their Church.
Many want to sign their own contract documents.
Many wish to see what the competition is for their supply before deciding.
Many are content to delegate the full responsibility to us to deal with the whole process including giving Notice to suppliers and signing new contracts on their behalf.
We secure Group terms from Suppliers because of the number of Church bodies that we represent, and have successfully battled (and will continue to battle) to get money back from any Supplier who has wrongly overcharged our Churches.
An initiative run by church people for church people. Thank you for your ongoing support.