No one has a crystal ball, but knowing that you have a rate locked in for your energy costs can help you better manage your budget, and that’s what a fixed price plan, which guarantees a single price for your contracted volume, is all about. Locking in a price for energy can mitigate the risk presented by fluctuating prices and can help you plan more effectively. Costs can be forecasted and budgets can be set over a longer period of time. A fixed price plan brings stability and predictability to your hourly, daily and/or monthly electricity costs.

"In a volatile energy market, the primary value associated with a fixed price plan is the protection of your profitability,” asserts Graham Leith, Senior Director of Energy Sales at Direct Energy. “That is, by increasing your budget certainty, you can build your business models (i.e., pricing for your own products, or tax base in the case of a municipality) with confidence, despite an uncertain economic outlook. With increasing volatility in all areas of the economy, fixed price plans can help you control the elements of your business that you can control."

Overall, the key benefits of a fixed price plan include:

• predictable and stable energy pricing;
• accurate budgeting for your energy costs over the term of the agreement;
• protection from potentially rising energy costs;
• choice of contract duration that suit your needs;
• the ability to choose the volume flexibility that you need to match your consumption pattern;
• competitive pricing with the highest levels of service, reliability and financial strength;
• fully customized service;
• improved cash flow management; and
• competitive advantage if prices increase.

In building any plan, Leith notes that the key objective is to match the contract to your business model. To that end, he outlines four key components worth considering:

• Term—The term of your contract generally should match your business cycle and be synchronized to the fiscal year, so that you are certain of your energy costs at the time the budget is set and throughout the reporting period.
• Volume—This is about covering your exposure, or your forecasted consumption, adjusted for any changes in your business outlook.
• Structure—What is the flexibility associated with your product or service? If you have high uncertainty in your load profile, a product that allows for volume flexibility would work well for you.
• Timing—Timing of the transaction should relate to your financial planning cycle, adjusted to avoid market events in the energy market going forward.

"Clearly, the primary factor in all of these decisions is your business model, not where the energy market is today," Leith adds. "And remember, you don’t have to buy a long-term contract to have a long-term strategy. For example, a lot of our customers buy one-year contracts, but we work with them to develop five-year strategies so that the timing and term of subsequent transactions is deliberate and fits with their overall business plan. It’s a way of combining proactivity with control."

Direct Energy offers two basic fixed price plans:

• Load Following, in which fixed price and volume are aligned to your usage patterns during the contract period, and
• Fixed Quantity, which allows you to purchase a preset volume without having to sign a long-term agreement.

And Direct Energy features a wide range of flexible options within each plan, including those based on flexibility bands, caps and collars, blend and extend, green power, carbon neutral options and more. To learn more about how a Direct Energy fixed price plan can work for your business, contact us at 1-800-968-3239.