Energy Procurement: The Best 10 Practices
The deregulation of electric supply that allows consumers to choose providers other than the utility continues to be a significant method to improve your bottom line! However like all business transactions, the idiom of 'buyer beware' is essential. Here are my top 10 recommendations of 'Do's and Don'ts' that will make your third party experience a positive one:
Go ahead and try or continue with third party supply because it does outperform the utility's default rate over time. The advantage is longer terms versus monthly, tri-monthly or six months.
Select a term and rate that will keep you asleep at night.
Go with fixed rates and stay clear from variable rates. Since the variable changes each month, why enroll or buy something that you have no idea how much it costs? Yes, variable rates will have lower rates during the shoulder season but the uncertainty of natural gas supply in New England has resulted in variable rates exceeding $0.25/kWh.
Most if not all suppliers will switch the fixed rate to a variable rate at the end of the agreement unless they receive a termination notice from the consumer at least 45 days prior to the end of the contract. Mark your calendar.
Enroll with another fixed rate agreement at the end of the previous term to avoid a variable rate.
Research the broker or supplier. Warning signs are settlements or fines. A simple search of the company name followed by 'review' should do it. Again, the idiom of 'No news is good news' is an excellent baseline.
Do not sign any exclusive arrangements with a supplier or broker. This is a 'carte blanche' for higher rates and no choice to compare with other brokers/suppliers.
Use three references especially for Industrial and Commercial clients in selecting a broker/supplier.
Understand the early termination fees.
Inquire if you can take advantage of a market drop by blending your existing agreement with a new one that lowers the rate. It is best to have more options than none.
I hope this helps and please let me know if there are other 'Do's and Don'ts that make life easier!