FAQs

Prices are high now and appear to be remaining high for the future. The days of cheap energy are over. There is a high degree of speculation in the market, which could see oil rise to $200/barrel, which could put a further 40% on top of electricity and gas prices. The need to look forward and manage prices is now essential. Back to top

What is an CUC Managed Tracker Fund?

A Managed Tracker is a flexible contract. You, the client, commits to buy energy from a given supplier for 24 months, however you do not have to fix prices immediately. You have the opportunity to follow the market and buy small or large amounts of energy when the market offers favourable rates. The need to commit the whole contract at very high rates is avoided. The risk of making a poor decision is reduced. Back to top

What is the difference between a Tracker and a standard contract?

Prices can be fixed monthly, quarterly, seasonally or annually rather than a single price for the whole contract. Prices are fixed by direct reference to the Wholesale Energy rates rather than quoted retail rates, which alone generates a 2 to 3% saving against standard procurement procedures. Prices can be fixed in a tracker for individual periods of time in the future, today. Back to top

Can anyone join an CUC Managed Tracker Fund?

Yes, any client of CUC can join a tracker; for the end user client the volume issue is not relevant because we are combining clients together into sufficiently large funds.

However each client will have to pass the suppliers credit checks in order to be a part of the fund. In addition, for those clients entering the Non Half Hourly Electricity Fund it will be necessary to install intelligent metering. This will form part of the costs of supply from the new supplier. Intelligent metering will become mandatory for all business premises during the next few years in any event. The costs are to some extent offset by a reduction in standing charges from the local distribution company. The data produced by the meters will be essential in managing energy in the future and assisting us in reducing the volumes of energy that you use. Back to top

Can I have a flexible tracker just for my company?

Yes you can. Provided you have sufficient volume in the selected energy category we can provide a unique tracker just for your company, which will not combine your volume with any other client. Back to top

How much energy do I use?

If you are unsure of your volumes contact your CUC Client Manager as soon as possible and they will be able to confirm all your current arrangements and volumes. If you are not yet an CUC client please call us today. Back to top

Who makes the decisions when to buy?

In a single client Tracker the client makes the decisions jointly with CUC as to when to buy and how much although the final absolute decision rests with CUC.In a multiple client Tracker CUC makes the buying decisions and communicates any purchases to you, in detail, immediately upon their execution. All clients are kept fully up to date by weekly email and can see the development of our purchasing strategy. Back to top

How do you make the decisions as to when to buy?

Buying decisions are made by reference to fundamental analysis and technical analysis.

Fundamental Analysis looks at the various drivers on the price of energy; for example, the price of oil, dollar exchange rate, system capacity, weather, world politics etc. From all of the news in the market we form a view as to whether the newsflow is going to drive the price up, down or sideways. This essentially forms our expectations of market rates in the future.

Technical Analysis relates to a study of the price charts themselves. From those we can form a good judgement on where prices may be turning from down to up or vice versa and then be able to make appropriate buying decisions.

In 2007 we recommended to all clients that they secure 2 year deals at the end of the downtrend which started in summer 2006. This is illustrated in the graph on the right. This was a combination of having followed the reduction in oil prices from $80 to $50 (Fundamentals) and the breakout of the price from the down-channel, which occurred in April 07. Back to top

How will I budget my energy costs?

Once we have sufficient volume committed to a Tracker we will sign off the contract with the supplier. That is the point of no return in that you are then committed to take the energy from that supplier. At that point we will be issued with fully inclusive market rates for two years. We will advise you of those rates and will provide you with a budget for that period. As you will read later we use this figure to benchmark our performance. Back to top

Which providers have you selected?

All suppliers of the CUC Managed Tracker Service are fully licenced Ofgem regulated energy suppliers. For reasons of confidentiality, in this document, we are not releasing the names of the providers here, however, your client manager will advise you as to which companies we have partnered for which of the utility categories.

The suppliers themselves are the vehicle which gives us access to the wholesale market rates. They, in themselves, cannot adivse on when or how much to buy. That is the job of CUC.

We have a number of suppliers who have agreed to provide the CUC Managed Tracker Service and we are constantly negotiating with all suppliers to ensure that the very best suppliers are working with us and our clients at all times. To obtain the details of the suppliers which we are currently using please contact us now. Back to top

How do I know their rates will be competitive?

The individual competitiveness of a supplier is now not as important as the timing of the purchase. For example on a given day two suppliers may offer to supply at 8p/kWh and 8.5p/kWh. Clearly the 8p deal is better. The point is that those prices could have been 5p and 5.5p if the purchasing had been considered at a different point in the year. Timing is everything.

The gross margins of the suppliers tend to be less than 3% of the cost of the supply generally. The remainder of your account is made up from fixed costs (between 15 and 20%) and the wholesale element, which is between 75 and 80%. It is this last element, which causes the violent fluctuations in contract rates. Back to top

How do I know that there will be no cross-subsidisation of prices in multi-client Tracker?

One of our key requirements was that no client should subsidise another client and no site should subsidise another site. Each site receives the price it deserves for its contribution to the Fund. Back to top

What does CUC get out of this?

We will receive a commission from the supplier who is operating the Tracker. Our commission is part of the 3% Gross Margin. Commission rates have been set in the same manner with all suppliers and therefore have not clouded our judgement as to whom we should be partnering. Back to top

How can I benchmark if CUC have done a good job?

There are two methods of benchmarking our performance:
The first is in relation to the opening contract price which is quoted on the day when the Tracker goes live. In effect that represents your budget for the year as it would have been if we had signed off a normal supply contract at that point in time. Our job will be to beat that price over the length of the contract.

The second is by looking at the long-run market average. Here we aim to manage your purchases such that you are, in the medium to long term purchasing below the market average. Our objective is to secure your prices in the bottom quartile of the long-rum average price band. Back to top

What systems are you using to manage the contracts?

We have specified our own bespoke system for the management of all our clients contracts and data and have committed expenditure of £150,000 in order to be able to do this. Back to top

When do the next tracker start dates occur?

Planned Start Dates for all Trackers are as follows:

Half Hourly Elelctricity:	Non Half Hourly Electricty:	Gas:
01/10/08	01/10/08	01/09/08
01/01/09	01/01/09	01/12/09
01/04/09	01/06/09	01/05/09
01/07/09	01/08/09	01/10/09
01/10/09	01/10/09	01/12/09

How will you join my contracts to a tracker start date?

If your supplies do not have a start date listed above then the supplier will offer you a short -term fixed contract from your current start date to the start date of the tracker. For example you have a Half Hourly supply starting 01/12/08. You will receive a 1 month fixed deal from the tracker supplier bringing you to 01/01/09 at which point you join the tracker fund. Simple! Back to top

If I join a Tracker with whom will I be contracted?

You will sign a contract with CUC giving us the authority to sign contracts on your behalf for the supplies of energy that you have.

Once a tracker has sufficient volume to make it valid we will sign a supply agreement with the supplier for your business, in your name and on your behalf. You are now locked into that supplier for 2 years, but the prices are yet to be agreed. A copy of that agreement is sent to you.

Each time we negotiate a price the rates are communicated to you by us. Back to top

How will I be billed by the supplier?

The supplier will bill you as per normal, and as per normal CUC will check the bills and deal with any and all queries, which may arise. You may wish to consider if you want centralised billing or per site billing as options to the supply agreement. Back to top