Your AF Energy contract FAQs answered

Perhaps you have questions about your energy supply contract through AF?

Here are our answers to your frequently asked questions.

Your question not answered? Send it to us. We’ll get it answered.

Questions about how AF buys energy

We changed to a better contract and we can still fix prices if it’s the right thing to do.

You may remember our communications with you in autumn 2021, when we explained we wanted to improve the way we procured energy. Back in September ‘21, the two-year fixed contracts with multiple electricity suppliers were to end.  By consolidating the portfolio of 8,000 sites and moving to a flexible contract we can secure better value and simplify the complex process of billing and reconciliation and make things easier for you.

This process of consolidation and analysis of all those sites took 6 months during which time we took a fixed contract with EDF and conducted a formal tender process. The portfolio could only be tendered when each site had been analysed so that potential suppliers could understand what they were bidding for. Just when these contract prices were being negotiated, the UK was experiencing all-time highs in the energy market.

This 6-month fixed contract expired at the end of March 2022 by which time we had selected a new provider of energy expertise (to purchase energy for AF Members on the wholesale market) and chosen EDF as the supplier (to deliver that energy to the 8000 sites) and we had moved to a flexible contract.

The flexible contract means we can buy electricity for you and other Members in smaller chunks, allowing us to respond to market volatility. This new energy buying structure also means we can take advantage of lower prices in future.

There are many long-term benefits from switching to a flexible contract.

The new flexible contract began in April 2022 as energy prices began to soar again on the back of post-pandemic demand and a global shortage of gas. These prices were predicted to stabilise as supply chains normalised and the pandemic receded. We settled for a short-term fixed price so we could take advantage of predicted price fluctuations, but we retained the ability to fix prices, by buying ahead, if our energy experts advised us to.

To simplify bills to you we agreed at the beginning of the contract to bill at a fixed price and then advise each Member every month whether we had been able to buy better or worse than that opening price.

We promised that after six months we would rebate you for any excess charges if we had been able to buy better than the opening price. If prices increased, we would invoice you for the shortfall.

For the first five months, from April to August this year, we did buy at a better price than the opening fixed price. The energy markets had fallen steadily, as anticipated, from the heights of February, despite the ongoing war in Ukraine. 

Then in June the gas pipeline Nord Stream 1 (which supplies gas to Europe from Russia) was closed for routine maintenance but did not reopen as expected. This event (as well as several other factors) sent the price of gas soaring again, not just back to the price seen at the outbreak of the war but way beyond anything previously seen. Since then, prices have remained at extraordinary levels and show no sign of returning even to what they were at the outbreak of war. The price of electricity is inextricably linked to the price of gas and remains at an all-time high.

90% of AF Members are on the same contract.

Some Members are on legacy contracts which were agreed before the flexible framework started but which will end soon. We are already talking with them about transferring to the main portfolio. That contract will give them better rates than if they agree a contract with another electricity provider.

We understand that other buying groups are in a similar position.

We are guided by industry leading expertise.

We partner with Kinect, a division of World Fuels. We chose Kinect as they are experts in global energy market trends.  One of the largest and most experienced energy brokers in the world, they have a track record of buying for several other major buying groups.

Kinect work with TotalEnergies to handle gas and EDF Energy to deliver electricity.

We respond and plan flexibly.

For the short term we continue to work with our advisors to monitor prices daily and procure your energy one month ahead.

Our long-term strategy, once prices are more favourable, is to return to our intended plan of procuring your energy further ahead. This could mean buying 100% of your forecast energy needs ahead of each twelve month contract period.

Questions about your AF energy contract

Farmers – and everyone else in society – are being affected by global energy markets.

In comparison to other sectors of the economy, farmers were relatively unaffected by lockdown. After the pandemic, while supply chain disruption was driving up prices, energy supplies were unable to meet the dramatically increased demand and some key new energy sources failed to come online as expected. Then Russia invaded Ukraine and as Russia’s crucial role as a supplier of energy became clear, energy prices rose even further.

For the first 5 months of 2022, from April to August we managed to buy at a better price than the opening fixed price in our new flexible energy contract. The energy markets fell steadily, as anticipated, from the heights of February, despite the ongoing war in Ukraine.  Then in June a longstanding pipeline (Nord Stream 1) was taken offline for routine maintenance but did not come back online as expected. This event (and other factors) sent the price soaring again, not just back to the prices seen at the outbreak of the war but way beyond anything previously seen. Since then, prices have remained at extraordinary levels and show no sign of returning even to the prices seen at the outbreak of the war.

Currently we are only buying one month ahead.

We will continue to tell you the price at the beginning of each month.

With Kinect, our energy experts, we continue to monitor the markets. When market conditions are more favourable and stability returns we can revert to buying blocks of electricity further ahead.

Hindsight is wonderful, but you can’t use it to buy energy.

Our new flexible contract began in April 2022 at precisely the same time that energy prices began to soar on the back of post-pandemic demand and a global shortage of gas. These prices were predicted to stabilise as supply chains normalised and the pandemic receded. We therefore planned for a short-term fixed price so that we could take advantage of price fluctuations, but we retained the ability to fix prices by buying ahead if our energy experts advised us to do so.

In early February 2022, prices were still rising, and we agreed to buy electricity in 3-month increments to give our Members some certainty but remain flexible. Three days after our decision, Russia invaded Ukraine and prices soared again.

We consulted our energy experts and after taking advice we decided the situation was so volatile it would be reckless to lock our Members into long term contracts at the outbreak of a war when uncertainty was at its height. We therefore decided to move to buying electricity on a month-by-month basis.

For the first 5 months, from April to August we bought at a better price than the opening fixed price because the energy markets fell steadily, as anticipated, from the heights of February, despite the ongoing war in Ukraine. Then in June, a longstanding pipeline (Nord Stream 1) was taken offline for routine maintenance but did not come back online as expected. This event (and other factors) sent the price soaring again, not just back to the prices seen at the outbreak of the war but way beyond anything previously seen. Since then, prices have remained at extraordinary levels and show no sign of returning even to the prices seen at the outbreak of the war.

We have not yet purchased winter energy.

On our energy experts’ advice, we continue to buy electricity on a month-by-month basis.

We are all in the same boat.

Whilst we cannot share the commercial information that has been shared with us in confidence, we know from our conversations with other buying groups that they are facing exactly the same issues and prices from the ongoing energy market volatility.

Probably not, on a like-for-like basis.

Many suppliers are refusing to take on new customers and those that are seek long-term commitments that cover the risk of further fluctuations and tend to be priced heavily in favour of the supplier.  What might look an attractive fixed contract in relation to current prices will seem very expensive as prices fall back.

Discuss with your tenant.

You could agree to charge them a base price for each unit of energy, plus or minus what you actually pay for the power they use over a given period when you have the bill. So essentially mirror the way that we are currently invoicing you. Use our energy cost calculator.

The price of your energy can fluctuate.

To make administration of bills easier for you, we agreed to bill at a price that we gave you at the beginning of the contract (April 2022) and then advise you each month whether we had been able to buy better or worse than the opening price. 

We promised that after six months we would rebate you for any excess charges (if we had been able to buy at better price than the opening price) or invoice for a shortfall if the price paid was higher.

The electricity price for September 2022 will be about twice the August price. This will not only wipe out the credit that we achieved from April to August, but will increase prices for future months beyond anything previously experienced. 

Now (September ‘22), we foresee that prices for winter months could be triple the Spring/Summer levels.

It’s hard to predict.

The strategy to buy only a month ahead is in place as a result of the current market conditions. When markets stabilise we can buy ahead in bigger blocks.

AF Energy’s long-term strategy is to return to buying 12 months ahead when markets normalise to deliver price certainty.

No.

Current market conditions mean this wouldn’t be a good idea as unit rates can be over £1 per kilowatt hour even for a fixed contract.

You are contracted for a 12-month contract.

The contract ends on 31st March. The current deadline for us to receive your written termination notice is 1st January 2023.

Your energy contract with AF is a business contract.

All energy supplied through AF is categorised as a business supply, even when it goes to a domestic residence. That means no Members buying energy through AF qualify for the consumer price cap, even if the supply is for a domestic dwelling. 

There has been confusion from government references to capping domestic supplies rather than domestic contracts. This means that some Members think they qualify for the price cap even if they don’t.

We are collaborating with our supplier EDF to put pressure on government to clarify this.  

General questions about your AF energy account

Only validated bills are sent to you for payment.

In some instances, EDF will generate a bill before your regular meter reads are in their system. Only when your account is updated with the actual meter reads, the validated energy consumption is billed to you.

We appreciate this can be frustrating. We have put pressure on EDF to improve their systems. Progress is being made.

Smart meters are good. But if your meter is located somewhere with no 2G signal, your meter will not be broadcasting. This is an industry-wide problem that your AF Energy team continues to press suppliers to develop a solution for.

You will still need to send monthly meter readings to us to ensure accurate bills.

We are pressing EDF to resolve billing issues. The three main reasons for these are:

  • you have provided an actual meter read after a period of estimated billing. EDF have to credit and rebill usage fairly across the previously estimated bill period;
  • opening and closing meter reads, between the old supplier final bill and the new supplier first bill, don’t match. If there is no actual meter read to rely on, all parties must agree on the estimated reads;
  • you have given meter reads but they are not reflected on the bill. When you provide a meter read (or when your smart meter or AMR sends on) this can be slightly out of sync with your billing cycle. This means you get an estimated bill. EDF are working on this.

How often you receive a bill depends on what type of electricity supply you have.

Half Hourly supplies are all billed monthly. This is an energy industry standard.

Non-Half Hourly supplies through AF are currently billed quarterly. Previously we did receive monthly Non-Half Hourly bills from one supplier. Feedback from Members was that you preferred quarterly billing. This is what we have negotiated with EDF.

Accruing funds for energy is an excellent idea.

We are testing a system to let you make monthly deposits against your future energy bills. The deposited amount will show on your AF statements. It will be ready very soon.

In the meantime, you can still make a pre-payment but this won’t show on your AF statement.

Speak to your AF Credit Control team on 01603 881904 or email sharon.everett@af.farm.

Resolving energy queries is complicated.

Sometimes several credits and rebills, backdating to previous suppliers, are all required to ensure you are billed correctly.

When it’s even more complex, EDF may put a bill stop in place. This stops further bills being raised so they don’t add to the ongoing issue.

Currently, we are seeing up to 12% failure rate in bill validation. We handle about 1,200 bills a week which means we have to deal with 100+ queries each week.

When we have resolved a query we get both a credit of the original incorrect bill and a rebill for the corrected amount. All of these have to be validated which means we are dealing with at least 3 documents to get a single correct bill on your account.

The energy markets are out of all our control.

We are still able to secure supplies for our Members and we are ready to benefit our Members if and when prices fall.  With Kinect, our energy experts, we continue to monitor the markets. When market conditions are more favourable and stability returns we can revert to buying blocks of electricity further ahead.

We handle the hassle, so you don’t have to, of validating your bills and ensuring you are billed accurately by your energy supplier.

Save money. Save time.