Guide: How to Purchase Electric Power and Natural Gas for Commercial Accounts

 In Energy Deregulation

Commercial accounts in states with deregulated natural gas and electric power markets have the “power to choose”. They are no longer restricted to the local utility to purchase energy.  Saving money by switching suppliers is now simple and easy to do with UtilityDiscount.com.

Many small commercial accounts have remained on the default service rates offered by the historic utility provider. Such rates are typically set by a State regulator.   These regulated rates may be okay, but substantial savings, often over 20%, can be achieved simply by switching to a competitive energy supplier.  Your local utility will remain responsible for delivering the electric power or natural gas to your home and service will not be interrupted.

Switching is easy, but there are many traps for the unwary consumer. 

There are many types of contracts for energy supply, fully fixed, variable rate, block and index, time of use, etc.  However, for most accounts, simple is the best and that is a fully fixed rate that provides budget certainty and a fair price.  This is especially true given the current stable, low-cost market for energy supply where one can now lock in longer-term fair priced contracts.

 

A challenge for virtually every buyer is the difficulty of price discovery. 

How do you know if you are getting a fair deal?   For small commercial accounts the process is fairly simple, use a website like UtilityDiscount.com to see what suppliers have on offer and make an “apples to apples” comparison for the best price for the contract term length of service you want.

 

Larger commercial accounts, spending greater than $2,500 a month, should all obtain custom pricing. 

To price, suppliers will analyze an account’s historical usage, which includes: total use; time of use; and peak demand, credit risk can also be a factor.  The suppliers look at the forward wholesale market price (which changes daily), calculate their desired profit, their existing customer base and usage profile and bid accordingly.  It’s complicated, but even more challenging is obtaining multiple bids and comparing the results from suppliers.  Historically, most buyers would solicit bids and be happy if just three suppliers responded.

Three bids are simply not enough to obtain the best deal.  Nationally, UtilityDiscount.com works with over fifty suppliers; while only a few suppliers are active in all markets UtilityDiscount typically solicits at least a dozen suppliers and most respond with very competitive bids.  The pricing is excellent and remarkably UtilityDiscount.com is currently able to offer their RFQ pricing platform without cost or obligation.  The actually contracting process is simple and web-based.

Has your current supplier given you a renewal price?  Nine times out of ten a supplier from our platform will substantially undercut the price of your renewal offer.

Already working with an agent or broker?  How many bids will be presented to you?  Do you know how the broker is paid?  Is the fee fixed and transparent or can the commission be adjusted without your knowledge?  Our customers receive the full benefit of the lowest bid; there are no “adjustments”.    The fee is low, fixed and built into the offers we present, nor we do not demand to be your exclusive broker, we are not afraid to compete. UtilityDiscount is compensated by the chosen supplier only when a contract is signed and energy delivered. Like Priceline, Orbitz, and InsureOne, our platform is free to use

Why not compare?  Run an RFQ directly on our web platform or use our Concierge Service and we will handle the RFQ for you just like a traditional energy broker without a surcharge.

Worst case you will have spent a few minutes documenting that a competing offer was fair.  Your due diligence in soliciting competing offers will be well documented.

Sophisticated offerings such Block and Index products are available from our suppliers in most markets. Please visit https://utilitydiscount.com/business/

Our View of the Crystal Ball – Where are prices headed?

Could pricing go down?  Possibly, but we don’t see any reason for a significant price decline in the next few years. Wholesale natural gas and electric prices are near historic lows.   There are plenty of reasons why prices could increase, particularly shorter-term spikes.  Natural and manmade catastrophes, unfortunately, happen all too often and can cause real and immediate price spikes. Looking ahead three to five years, we anticipate a relatively flat wholesale energy market, subject to periodic short-term volatility.

 

What type of supply contract is best?

Given the current low-cost environment, there is little reason to be creative unless the energy cost is a very significant portion of your cost and you have the ability to curtail use and demand on short notice or have cogeneration abilities.  Variable pricing options such as day ahead or block and index offer savings opportunities but are best practice in conjunction with dedicated onsite monitoring and demand management.    A few days of price spikes can quickly upset a year’s worth of savings if the account cannot immediately adjust to market conditions.  Bottom line, you risk paying a substantial premium in price if you do not have a longer-term contract locked in place when prices invariable spike.  We recommend at least a year and are comfortable with customers entering into two and three-year contracts to secure a fair priced contract and achieve budget certainty.

 

Why wait?  Price compare and save now with UtilityDiscount.com