Buying an amount of energy in advance

savers_united

With the roll out of smart meters and more accurate meter readings, could we see in future other fixed tariff options that rather than fixed tariffs in duration are fixed tariffs based on energy amounts. 

So let's say you agree with your supplier to buy 30000kwh of Gas (which by your own calculation could last 3 years), at x per KWh, the supplier goes to market and secure that contract for you and you pay them in one single payment or over a term based on previous usage data, you can then forget about energy prices until you use your 30000kwh, it's a contract so no switching until the 30000 is used.

This would be bespoke and limited to maybe only certain customers who qualify based on their payment history, usage data. You could even take the contract to your next property if you move. But the key thing here its usage based rather than time based like current fixed contracts and unlike pre paid meters which offer similar upfront energy purchases this agreed in contract at a fixed price. 

You could even have comparison sites where you put in how much you want to buy and they will come back with a total contract cost.

Does a model like this make it easier for suppliers when they purchase energy to manage the amounts they need at certain costs. 

Grumpy_chap

You mean like buying a tank of oil, but someone else stores it for you.

savers_united

Pretty much, but you are buying an amount here via contract, its not physical until you need it, and if that is in 2 years then it's likely still under the sea bed.

Read somehwere that Gas producers prefer longer contracts as well. 

MWT

savers_united said:

Does a model like this make it easier for suppliers when they purchase energy to manage the amounts they need at certain costs. 

Only if you can commit to exactly when you will use it as well.

Without the time component you are just asking someone else to carry the risk of providing what you want when you want it, in other words a variable tariff...

[Deleted User]

I agree. What is important to the industry is not just how much energy is used but when it is used. I cannot see any supplier agreeing to your proposal unless part of the contract is a power limit at certain times of the day. Power limiting contracts are already in use in many parts of the World; eg; consumers agree not to exceed, say, 5kW and in return they get a reduced tariff. The ‘downside’ is that suppliers will have the right to disconnect a supply if the power limit is exceeded and messages are ignored.