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Interpreting Financial Information 

In Flexitricity’s case, supply activity represents only a small proportion (in margin/EBIT terms) of the overall business. Supply activity is a commercial requirement which facilitates other, more material, revenue streams but doesn’t drive key business and profit growth, nor does it drive significant cost. Therefore, costs relating to supply are limited to fuel costs and transportation costs.

The majority of Flexitricity’s margin and revenue comes from delivery of what Ofgem describes as “other services” which are included in reconciling items. These revenue streams are primarily from wholesale trading, balancing mechanism, ancillary services and participation in the capacity market. It is these revenue streams that drive material business costs which are therefore also included in reconciling items. 

Other revenue includes income of a project nature outside of normal operation and can be found below the main turnover total in the statutory accounts.

Hedging

Ofgem have introduced tighter measures to ensure suppliers are taking an appropriate and proportional amount of risk on the domestic tariffs they provide to customers vs. their exposure to the market in backing off against those tariffs, understanding more deeply their financial resilience.

This has brought about the SoLR conditions and guidance:

20160631 - draft Guidance on supplier of last resort and energy supply (FINAL)GB10062016

Our exposure, as suppliers to non-domestic consumers only is that we offer a simple pass-through (imbalance) contract structure and do not face particularly price /market risk. We do not currently offer tariff driven contracts to customers.

On behalf of our customers, hedging is driven from asset backed principles, which means that we would only hedge when we consider the asset will deliver the volume and value against that hedge to ensure risk is minimised.

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