Like many companies in the transport sector, Metroline is eager to drive towards electrifying its fleet to reduce its carbon footprint and cut overall energy costs.
When it comes to managing energy, Metroline has been with E.ON for more than a decade. And throughout this period, it has typically managed its volume requirement via fixed-term contracts, taking an ‘arm’s length’ transactional approach.
Flexible, future-proof solutions
“Over the past 10 or so years, we locked into fixed contracts while energy prices were more predictable and affordable. But as the market became volatile over the past couple of years, we decided to take action and look into options for better understanding our usage and managing our demand,” explains Brian Russell, Head of Purchasing and Contracts at Metroline.
When assessing available options, Metroline decided it was time to make the move from a fixed to a fully flex contract to better manage its volume risk exposure. This decision was especially important considering its desire to fully electrify its large fleet in the future.
As a member of ComfortDeGro, one of the world’s largest passenger land transport companies, Metroline’s main focus is to become London’s leading bus company. Carrying over 1 million people across England’s capital each day,
Metroline’s fleet currently consists of 1,520 buses, including 700 hybrid buses, 100 all-electric buses, and 20 hydrogen buses that have been in operation since 2021 – the first of their kind in England.
Developing a strategic partnership
In July 2021, the transport operator signed a three-year Flex Portfolio Solutions contract with npower Business Solutions (nBS) (part of the E.ON Group). And over the course of the last two years, it has been able to build a strong strategic partnership with the Flex Portfolio Management Team on nBS’s award-winning Optimisation Desk.
“We have complete confidence in the Flex Portfolio Management Team and our relationship has enabled us to gain as much knowledge and insight out of the team and its wider Non-commodity Team as possible,” explains Brian.
“Sam, our Flex Portfolio Manager, has made every effort to properly understand our business and the challenges we are currently facing and will be facing in the future. And with this understanding, Sam has been able to expertly tailor our hedging strategy and advice around this knowledge,” Brian adds.
Sam has been managing Metroline’s portfolio and working closely with Brian for the last year, helping him navigate through market turbulence in summer 2022.
We have complete confidence in the Flex Portfolio Management Team and our relationship has enabled us to gain as much knowledge and insight out of the team and its wider Non-commodity Team as possible
“Over the last 12 months I have been able to really understand the challenges Metroline faces and how we, as a risk management desk, can help work through these difficulties. This has created a strong strategic relationship between us,” explains Sam Bannister, Portfolio Manager at nBS.
Energy trading made simple
nBS’s Flex Portfolio Solutions offering has been designed for energy trading on the wholesale market, to give customers the flexibility they need, coupled with the right level of support to suit their expertise, time constraints and internal resources.
Metroline was offered the choice between trading independently or delegating, within predefined limits, some or all of the decision-making process to Sam, their dedicated Portfolio Manager. Plus, throughout the whole process, Metroline has been able to take advantage of the knowledge of the experts on nBS’s Optimisation Desk, who are uniquely positioned to help manage their energy position and spot market opportunities.
“Our relationship with the Optimisation Desk has enabled us to exchange knowledge and experience between our teams, which has been hugely beneficial to our overall risk management strategy,” says Brian.
Moving out of the fixed and into the flex world has enabled Metroline to operate with a changing forecast, and better understand the construction of the price and market drivers for both commodity costs and non-commodity charges.
By choosing Flex Portfolio Solutions, Metroline now has direct access to market information, insight, and expertise to assist with energy trading and planning.
“I believe that the two main benefits of Flex Portfolio Solutions for Metroline are the flex contract itself and market expertise.
Our relationship with the Optimisation Desk has enabled us to exchange knowledge and experience between our teams, which has been hugely beneficial to our overall risk management strategy
“Metroline’s growing business will result in volume changes and this will be accommodated within their flex contract, but we can also tailor the strategy to this expectation. The second benefit, and the most significant for me, is the strategic nature of the relationship Flex Portfolio Solutions has been able to nurture,” Sam adds.
Furthermore, the results speak for themselves, with Flex Portfolio Solutions helping Metroline to beat their benchmark performance by circa £30/MWh for summer 2023. And, looking ahead to 2023/24, the transport operator is on track to beat their benchmark performance by circa £20/MWh for both winter 2023 and summer 2024.
Looking to the future
Looking ahead, it is difficult to predict how the market will evolve and what this will mean for customers, which is what makes Flex Portfolio Solutions particularly attractive for companies looking to build an effective strategy for their long-term business objectives.
“In the near future, the obvious challenge will likely be the market, which is still at historically elevated levels and is still prone to extreme volatility. But with the strategy we have in place with Metroline, we will be able to navigate this challenge by mitigating as much risk as possible and delivering a competitive unit rate,” Sam concludes.
npower Business Solutions does not provide energy for homes. We do not hold any accounts, information or services for home energy. If you are a customer who was previously with npower for your energy at home, you have been moved to E.ON Next, who offer specialist services, designed to support you. Please visit the E.ON Next site for support, and all the information you need about home energy, from your existing account to new quotes.
npower Business Solutions does not provide energy for smaller businesses and we are unable to provide quotes. We do not hold any small business account information or services. If you are a small business who was previously with npower, you have been moved to E.ON Next, who offer specialist services, designed to support you. Please visit the E.ON Next site for support, and all the information you need about small business energy, from your existing account to new quotes.
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