Power Efficiency

Bobby Collinson, Managing Director of Power Efficiency talks more on security deposits

Posted on Monday, February 15, 2010

“Our company currently uses an energy consultant to find us the best deal for gas and electricity as we do not have any procurement specialists in this area. During recent negotiations the consultant has said the only deals they can find are ones where we would have to pay a substantial retainer. Is this normal in the sector, and what can be done about it?”

The use of security deposits, which is what I think you are describing as ‘a retainer’ have become much more common since the economic downturn in late 2008.  Energy suppliers were caught on the hop, just like everyone else, and have introduced tighter credit checking and security deposits as way to insulate themselves from the perceived risk of customers not being able to meet their bills.
 
Credit checking is a binary decision: you pass or fail.  The outcome determines whether the supplier will sell to you, or have pre-requisites to the trading agreement.  Providing as much information as you can to support the liquidity of the company at this stage will help increase your chances of passing and avoiding the deposits, of which over £350m is currently held by the industry.
 
We have very successfully negotiated out of a number of security deposits for clients or introduced flexible terms that do away with a substantial upfront cash payment, through larger initial monthly instalments.  A proportion of this forms a deposit building in an escrow account over a fixed term.
 
Bobby Collinson, Managing Director, Power Efficiency