Managed Tracker Fund

Changes In The Energy Market

The biggest change to the energy market has been the development of the Futures Market in both electricity and gas. In essence, a client can now make a deal for electricity for a contract which may not start for up to 3 years into the future. For example, if the price for a contract starting on 1st October 2009 is very cheap in June 2008, then you as a client can make a deal in June 2008 for that contract.

The second major change is that the term over which contracts run has altered. Historically, all contracts ran for 12, 24 and 36 months. We can now take short contracts for 1-3 months or half a year or for a whole year. The benefit here is that when the prices are high, a client can take just short contracts in the expectation of a reduction in price and then secure the balance of the contract at lower rates.

Wholesale Market Access

For the very biggest UK energy buyers, there is no problem in being able to access the wholesale markets and take advantage of the future contracts and of the short term contracts. However for smaller clients, who do not have enough utility volume on their own to participate in that market, then it is necessary for them to act together in order to have sufficient volume to enter the market place.

CUC Solution: Managed Tracker Fund

CUC has undertaken a rigorous review of all products in the energy markets and we have decided now to offer the concept of a Managed Tracker Fund to all of our clients.

Managed Tracker Fund: The Concept

CUC will pre-select a given supplier for a given market i.e. half hourly, non half hourly or gas. A 24 month agreement is set up with that supplier, however the prices that will be supplied within the agreement are not agreed at the outset. Client's commit, via CUC, to take energy for that period throughout that contract from that supplier.
The energy will be purchased in units of 1 month or a quarter of supply at a time when the price is high, avoiding the risk of taking all of the contract at the highest rate.
When the price optimises, we will then purchase the balance of the contract and secure it at a lower price.

Managed Tracker Fund: In Practice

CUC sources the market for the right supplier.
Sufficient number of clients agree to act together to gain the minimum volume of between 30 and 50 million kWh, in order to create the Tracker Fund.
Each client contributes their volume to that Managed Tracker Fund and enters into an agreement guaranteeing that their volume will remain with The Managed Fund, whilst they have control of the supply.
CUC manages The Fund and is the decision maker. Each client gives that authority to CUC on their behalf.
CUC executes the purchase decisions in the client's name and reports back on each purchase decision at the time of its execution.
The client is issued with individual prices for each site, based on each site's contribution to The Fund. There is no cross subsidisation either between client nor between sites of clients. Essentially you will end up with a price unique to each site based on the value of that site to The Fund.
A contract is then created between each individual client and the supplier to support the prices that have been agreed.
Each time the price changes and CUC carries out a purchasing decision, then full notification will be sent through to each client of the actual prices that will apply for the supplied period.
CUC will manage the billing going forward to ensure that it is accurate, especially at times when the price changes from one period to another.
CUC will also manage the site list with any additions or deletions from the contract.
CUC is paid a commission by the supplier, and it is the same regardless of which suppliers are selected.
A weekly newsletter will be sent to all participating clients advising movements in the markets and our purchasing strategy.

Fully flexibile

For individual clients who are large enough to have a fully-flexible on their own and not have to go into a fund with others. The principles are the same. (Instead of buying all at once, buy in tranches).

Qualifying Requirements

For clients whose energy consumption is more than:

1/2 hourly 8 million per an annum
Non 1/2 hourly 25 million kwh per annum
Gas is more than 15 million kwh per annum