The longer fix has a second risk

For a school renewing this autumn, a longer fixed contract offers an understandable attraction: fewer occasions to confront an uncertain market, and rates that can be carried into future budgets. Yet the amount of energy the school needs may change considerably before the agreement ends. The question is how much certainty the school is buying, and which commitments come with it.

Since October, academy trusts have had a more explicit requirement to assess their energy route against DfE-approved options, with equivalent-value alternatives permitted. The practical challenge reaches every setting. A maintained school needs to check its authority and commitments under its LA arrangements. An independent school’s bursar must connect the purchase to its own governance and operating model. Each needs an agreement that suits the years ahead.

Future demand belongs in that decision from the start. Opening hours, boarding occupancy, lettings, additional sites or an agreed reduction in use can change the requirement during a multi-year term. Last year’s bills provide evidence of past consumption. The buying brief should explain what is expected to change, when, and how confident the school is in that forecast.

Contract length and price certainty are different choices

A three-year supply period says how long the relationship lasts. It does not, by itself, explain how prices are set. Specified charges may be fixed, the commodity component may be fixed while named costs pass through, or energy may be bought in portions under a managed strategy. DfE’s guidance describes these different structures. Schools still need to examine provider labels and exclusions.

That distinction matters when budgets are tight. A lower starting estimate with variable charges can leave the school carrying uncertainty that another offer prices in. Conversely, a fixed arrangement can hold the school to agreed rates when later market prices fall. Flexible purchasing creates decisions about authority, remaining exposure and reporting. It deserves a buying policy that governors can understand, rather than an assumption that spreading purchases removes risk.

The duration decision follows from those choices. Twelve months brings an earlier review and another renewal exercise. Twenty-four or thirty-six months can reduce repeated procurement work. Longer arrangements, where actually offered, extend the period over which demand, site and service assumptions must remain workable. There is no universal ideal: a stable operating requirement with limited budget tolerance presents a different case from a school expecting a material change in use.

The whole bill belongs in that discussion. Standing charges, separate metering or data costs, direct service fees and disclosed commission can change the comparison. Any assessment of a longer term should show what the school pays over the full term, the work promised in return and the obligations that survive a change of adviser.

Changed demand can change the value of a quote

Consider an invented school expecting annual purchased electricity to fall from 500,000 to 400,000 kWh following a planned change in how the school operates. A supply contract requiring at least 90% of the original reference volume would set a 450,000 kWh floor. That leaves a 50,000 kWh gap to explain. Whether a charge arises, and how it is calculated, depends on the actual terms. The example demonstrates why expected consumption reduction belongs in the procurement brief before quotations arrive.

It also shows why a favourable unit rate cannot settle the choice. The school may need a revised volume, a suitable tolerance or an agreed change provision. Suppliers should receive the same forecast so an apparently cheaper quotation is not based on a different requirement. The response to lower use belongs beside the tariff and standing charges in the comparison.

Demand can also increase. Longer opening hours, additional residential use or another site can alter the quantity and timing of energy needed. Where solar or a heating change is already planned, its relevance here is the expected effect on purchased electricity and gas. The school should provide the validated forecast and expected date. The supply adviser can then examine the contractual consequences.

For an independent boarding school, residential use, catering and a pool may continue through periods when classrooms are quiet. A trust adding a school may inherit different suppliers and end dates. These operational differences make the demand forecast more useful than an assumption that last year’s bills describe the future.

Test the forecast over the proposed term

A planned operating change may happen later than expected or have a smaller effect on demand. Procurement should distinguish an intended date from the point at which changed consumption is reasonably supported. Record who owns the assumption and what evidence would justify revising it. A supplier needs a clear requirement rather than an unexplained percentage reduction.

The useful comparison includes a central operating plan and credible alternatives: demand changing on time, changing later, or remaining at the existing level during the supply period. Each should retain the same clearly stated contract conditions. That makes the consequences of a minimum-volume clause visible without pretending to predict the weather, school activity or energy market.

Even tax assumptions now cross a dated boundary. HMRC’s 28 October update extends the temporary zero rate for qualifying Great Britain electricity through 30 June 2027. Eligibility still depends on use. A multi-year comparison needs the correct treatment for each period.

Give every supplier the same future demand brief

DfE’s minimum-standard questions ask schools to establish their usage information and seek written offers that disclose the relevant charges. The commercial implication is straightforward: finance, the school staff who validate demand and any appointed adviser need a common account of the requirement. Historical consumption should stay intact, with future adjustments explained separately so later reviewers can reconstruct the decision.

If the school uses a TPI, its agreed service can connect the demand forecast to supplier responses, identify a clause that conflicts with the brief and obtain a written answer before recommendation. The school retains approval. A disputed contract interpretation or uncertain tax treatment should go to the appropriate specialist, with responsibility and cost recorded.

A longer fix can be a sound choice when its specified certainty suits the budget and its conditions accommodate the demand forecast. A shorter or differently structured agreement can also be justified. The strongest recommendation explains that fit in ordinary language: what is known, what may change, what the contract allows and how the school will respond. That is the account a governing body can carry forward when consumption, the market or the leadership team changes.