Index pricing explained

What is index pricing? 

Many business energy contracts are based on offering a fixed unit rate, with changes in wholesale energy costs and variable industry costs priced in. Fixed contracts also usually include volume tolerance charges, which are applied if a business uses more or less energy than forecast over the term of the contract. 

In comparison, Index Pricing offers far more flexibility and transparency. Prices are calculated a day ahead and more closely reflect wholesale market rates. Industry costs such as Transmission Network Use of System (TNUOS), Distribution Network Use of System (DNUOS) and Climate Change Levy (CCL) charges are also passed through to the customer.  

At Good Energy, we offer Index Pricing to business customers that have a half-hourly meter.

What are the benefits of Index Pricing?

• Benefit from drops in wholesale energy costs: Index Pricing allows customers to take advantage of drops in wholesale energy costs. While it also means prices can rise due to changes in the market, Index Pricing may still be preferential to out-of-contract rates or a higher cost fixed tariff.
• Match the shift in prices
  If you sell electricity as well as buy it, you can match the shift in prices that you receive for the power you generate. 
• No volume tolerance charges
  As we won’t have to buy your energy in advance and offer it to you for a fixed price, you will only ever pay for the electricity you consume.

How can I switch to Index Pricing? 

If you’re interested in switching to Index Pricing, please get in touch with the Good Energy business sales team on 0800 254 0021 or email business-sales@goodenergy.co.uk.