If you’re an electricity or natural gas customer in a state with a deregulated market, you may select a competitive supplier that offers pricing lower than the local utility’s default tariff rate. If you have many demands on your time, you may want assistance with finding the best energy supply solution. Here are some frequently asked questions and answers to help you understand the energy market.
How does deregulation affect the reliability of my energy supply?
It doesn’t. Nothing changes regarding the reliable delivery of your energy. Your local utility company doesn’t know and doesn’t care which customers in its service territory use a competitive supplier. Your lights will not flicker, and you won’t even notice when your electric supply begins with a competitive supplier. If you experience a power outage, your local utility company will service the power lines and restore your power under the same protocols that have existed for years.
All consumers pay a tariff amount each month to the local utility for delivery, servicing, and billing. When you begin to pay your chosen competitive supplier, your account number will not change, and your local utility will continue to process your bill. The transition process is seamless.
I’m busy running my business. How can I find a competitive energy supplier with a good price?
The first step is to vet suppliers, then request price discovery from several energy suppliers in your service territory. Prices are volatile and change throughout each day. All prices are indicative, meaning they are good for that day only and must be confirmed by the supplier before becoming final.
Decide if you want an index price or fixed price. An index price changes every month. Although lower average costs are possible, you bear the risk of higher prices and dramatic monthly fluctuations. A fixed-price contract locks in one price for all of the energy you consume during the entire contract term. Locking in a fixed-price contract eliminates the risk of price increases and achieves budget certainty. You may choose to work with an energy consultant to do all of this work for you, and to watch the market and recommend the best time to buy. Currently, electricity and natural gas prices are at 8-year historic lows, making this a good buying opportunity.
In addition to low prices, what else should I consider when selecting a contract?
Evaluate all of the contract terms and conditions. Bandwidth and “change in law” provisions are important. Consider what will happen if your business needs to add or drop a meter. Beware of contract terms that kick in based on certain events and that can add costs over time.
Electricity supply components include capacity, consumption, ancillaries, line losses, energy taxes, and network integration transmission service. When you compare prices from competitive suppliers, you must fully understand what is included in the price to be sure you are comparing “green apples to green apples.”
I’m currently in a contract. Do I need to wait to consider what to do next?
No. You can lock in a fixed-price contract today that begins when your current contract ends, even if the expiration date is a year or more in the future. Your next contract can cover a term of several years. No matter when your current contract ends, exploring opportunities now may be very prudent.
How else can I save money on energy costs?
You can receive cash payments for reducing your energy consumption during peak times. Under Demand Response programs, participants are paid based on the electricity usage they shed. Consumers reduce energy consumption by decreasing lighting, adjusting temperatures, using onsite generators, and in other ways.
Consider undergoing a property or facility audit to examine ways to reduce energy consumption. Many utilities offer cash rebate programs for energy efficiency upgrades, such as lighting retrofits, installing occupancy sensors, switching from incandescent to compact fluorescent light bulbs, using variable frequency HVAC systems, and modernizing equipment.
I’m bombarded with phone calls from so-called energy consultants. Who should I trust?
You should be skeptical and engage only when you’re satisfied that the person is capable and reputable. New consultants emerge everyday, some of which repeatedly contact business owners and claim to be experts. Look for longevity in the marketplace. Ask if they are licensed with the state Public Utility Commission. An energy consultant should be independent, obtaining prices from many suppliers instead of working for one or two suppliers. Ongoing customer service is a key differentiator too. Just as important as selecting a contract is execution of the energy procurement process and service after the contract is implemented.
APPI Energy is endorsed by the American Society of Association Executives, and provides independent consulting services to members of 140 state and national trade associations and Chambers of Commerce, including IMC. Since 1996, APPI Energy has assisted more than 3,300 organizations with locations across the United States. Members benefit by using APPI Energy’s procurement expertise and experience to reduce operations expenses. To learn more, contact 800-520-6685, firstname.lastname@example.org, or www.appienergy.com.