Put questions to Pure Planet Community co-founder Chris Alliott - how we buy energy

  • 5 February 2019
  • 15 replies

Great to be back here in the community.:)

As one of the co-founders of Pure Planet, part of my role is to run the team which buys our Members’ energy.

We’ve one simple, variable tariff, as you know. Our aim is that you’ll never pay more for your energy than the price we pay for it on your behalf. Simply, you pay what we pay for the energy you use. Our Members’ rate is based on wholesale prices and includes just the additional network and subsidy costs all energy consumers have to pay, with zero markup.

We buy your energy in advance. This is called ‘hedging’. Hedging energy works a bit like changing your holiday money in advance. The exchange rate will still move after you’ve bought your Euros or Dollars, but you get certainty about how much you have and how much it cost.

But with energy, it’s more complex - so we blend the cost of your energy by buying bits of it at various points. Simply, we don’t buy all of your energy at one fixed price, we blend - or hedge - over time.

This means that if we forecast you are going to use ten units of power or gas on one day, six months from now, in July say, we might buy six of those units now; another two units in three months' time; and the last two units a month out.

Then, on the day before, we look at the most accurate forecast we have for your usage on that day and make any small, final adjustments to get as close to your actual usage as possible .

All of these wholesale purchases will be at different rates. Our aim is that we secure your energy well in advance and at the best prices, given prevailing market conditions. And hedging is as much of an art as it is a science, because wholesale prices are bouncing around all of the time.

Thankfully, we have some clever people helping work this all out, plus the support of BP our investor and trading partner.

Every quarter we publish a blog post about what’s going on in the wholesale energy market.

Last year wholesale energy prices rose significantly, caused by a sustained demand for gas.

I thought it would helpful to our Members to answer any questions you may have about how the wholesale energy market works, how we buy in advance, and what causes prices to rise or fall.

Our community manager @Marc will collate your replies below over the next two weeks - then we’ll close this thread and I’ll come back with answers. 🆙

I’m looking forward to seeing your questions!

15 replies

Userlevel 7
Badge +9
Hi Chris,

PP provide so much information....I cannot think or see (for my wee brain) a real need to dig deeper, as it appears that PP are a transparent company, that's growing, hard to avoid the growing pains, shares those pains via the community whilst endeavouring to resolve glitches.
Maybe some info on BP's influence and support or their expectations as a share holder.
Userlevel 7
Badge +8
Hi Chris, I share Strutt G’s thoughts about this young innovative energy supplier who are ‘doing things’ differently. My only question is, do Pure Planet only purchase energy through BP?
Keep up the good work 👍👍
Badge +2
Hello Chris,

I'm just trying to reconcile the fact that the electricity unit cost members pay is stable for months at a time, while your wholesale costs clearly fluctuate rapidly? I appreciate that buying in advance can mitigate here, but I'm not sure how the members' stable unit rate can be accurately linked to Pure Planets' more volatile rare without some degree of retrospective reconciliation?
Userlevel 7
Badge +9
Hello chris.
Do you see a time in the near future when you and BPlightsource will partner up and provide an install and fit payment service for PP customers?
Userlevel 7
Badge +8
Hi Chris

I don’t have any questions, but thanks for doing what you do. PP is superb 👍👍👏👏👏👏
Userlevel 7
Badge +10
Hi Chris

My first question, in a roundabout way links with Lenny's question (sorry Lenny not trying to hijack yours)
What proportion of your energy purchase is forward fixed (hedged) in price - in other words what happens if you sell more than the amount you've forward bought, and do you mix different lengths of fix to allow for changes in membership?
If not I'd be fascinated for any more detail on the buying process if it's not too commercially sensitive.

Is the long term strategy to take PP public?

I'm not an EV owner (I wish I could be), but there's a certain irony in a green company not offering incentives or a plan for EV owners. Why not?

regards and keep doing what you're doing...
Can you clarify the timing of payments. We appear to pay you in advance, but presumably you don't pay wholesalers in advance. So you're sat on alot of customers money. And if you go bust, we all stand to lose big time ?
Hi Chris. Couple of questions: 1) finance are using emojis now? 😱🤣. 2) In taking the courageous and ethically brilliant step to provide renewable energy at wholesale cost to your members - what cost risks keep you awake at night and is there anything we members can do to help PP keep ours costs as low as possible? (thanks for the recent cut in members rate btw!).
Userlevel 7
Hi Chris

Possibly a slightly dull techy qu here, but as a science teacher I'd be interested how the industry calculates the calorific value of the gas and to what extent that influences the price you, on behalf of us, pay for it.
Has there been any replies to these questions yet? Can’t see any, but maybe I’m being dumb...!
Hi @Snoopfish
Def not dumb! :)
As Chris said at the end of his post, we're going to wait a couple of weeks to give people a chance to get their questions in. When it goes a bit quiet, I'll close the thread, gather all the questions (including those asked on social media), and then Chris will create a new post with all the replies.
We did the same thing for a Q&A with our chief exec Andrew Ralston earlier. The community asked their questions here. Then when they'd dried up a bit I collated them, giving Andrew time to reply, and he answered in full here.
Userlevel 7
Badge +9
Hello again chris.
Any chance of a limited open day where curious people like me can come and see the buying process in action, it ok reading about buying in advance and hedgeing but to see it in practice would be way more interesting.
What happens if you buy too much ? Is it a case of use it or lose it? How does the system balance your purchases with the usage of the members?
Userlevel 7
Badge +8
Nice question Jon, really hope you get invited as something you’re passionate about 👍🎟️
Thanks everyone who's posted a question here! :raisinghands: Some really good questions!
I'm now closing this thread and collating all of them, alongside some questions that have also been asked on our social media channels, and handing them all over to @Chris Alliott so he can answer them!
The anwers will be posted in the community - I'll let everyone know when they're done 🆙
Hi all
Thanks for asking these brill questions. :raisinghands:
Just to let you know that Chris has posted his answers in a new post you can find over here.