 Doing the Time Warp Again!
August 22nd 2008
“It's astounding, time is fleeting
Madness takes its toll
But listen closely, not for very much longer
I've got to …”
“Ask your energy advisor what the hell they think they are doing?”
In 2005 / 2006 a lot of energy advisors let their customers down, consumers had to bear high prices and the market conditions were blamed; when arguably this was not true.
Then some advisors got lucky in 2007, and you got a cheaper price but if it was higher than £35/MWh or 35p/therm then you have potentially been done a disservice.
These things happen and your business has so far survived, that’s possibly ‘in spite’ of rather than ‘because’ of your energy advisor.
The tragedy is that despite this experience in 2005 and 2006, your organisation finds itself in the same position for 2008, 2009, 2010 and 2011, it’s a time warp that only you can break. So what is this Time Warp?
A group of energy advisors, whom some would consider to be naïve, recently came out and recommended that you should fix all of your energy 4 years forward when the oil price was $145 per barrel.
It begs the question why wasn’t that suggested while they watched your energy portfolio increase through a $90, $100, $110, $120 and $130 oil price increase.
What on earth makes them think that your business would benefit from fully locking your energy prices that far forward when the market would most probably be recessionary; it would be an amazing speculation and at best one that is just too late!
Despite this questionable advice many of you will not be in the position of having just fixed out 4 years forward I hope. Your advisor is likely to have you fixed about 12 months forward for less than 50% of you portfolio.
This mean that your advisor has presided over and deemed acceptable a 45% increase in your 2008 costs versus budget and a 90% increase in costs for 2009 and 2010; at what stage did you authorise this?
This all happened to you in 2005 and 2006 - its happening to you again now; its time to change things and not let time keep warping on you.
If you are not close to being fully fixed 3 years forward and haven’t been for some months, you may want to ask some serious questions with respect to your energy advisor.
Encore clients have been fully fixed for some time and are now close to 80% ahead of market for the next 3 years while still being able to participate if the markets fall.
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