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All About Energy

How the Power to Choose Benefits Your Bottom Line

JB Sowyrda Nov 10, 2015 8:07:00 AM
JB Sowyrda
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power to choose

 

Choosing an electricity provider can be difficult. There are over 45 retail electricity suppliers in Texas jockeying for your business.  How did we get to this point?  How does deregulation impact my business? What is the best rate, and how do I know what supplier will best fit my needs? The power to choose your electric provider allows you to lower operating costs and gives you more control over your energy policy. 

 

How We Got The Power to Choose

In 2002, Texas Senate Bill 7 passed allowing for freedom of choice within various Texas markets. When competition opened, electricity providers raced to serve your home and business’s needs. Companies flooded the market looking to capitalize on the electricity market. Residential, small business, and large commercial companies were now targets for retail competition.

 

How The Power To Choose Works

Texas is a deregulated electricity state, but not all cities in Texas are deregulated.  For example, Austin is considered a “regulated state” while Houston is a “deregulated state”.  

 

If I'm a business owner in Austin, I have to use the regulated electricity rate. If I'm in Houston, I can choose my provider and shop for the lowest rate to get the best contract for my business. Companies of all sizes should take advantage of free-market deregulation as early as possible.

 

I once worked with a company that was considering whether or not to move their business to a deregulated or regulated area. The operating costs of the facility would be a strong driver in their decision. While the cost of the facility itself would not change much from location to location, energy costs would.

 

I created an energy cost analysis using info from the company's engineers. I estimated the energy costs for each facility and the overall cost for the company with prospective rates from local energy suppliers. The cost was high enough to justify building in an unregualted area.

 

Choosing a Supplier

What started with just a handful of suppliers, has now ballooned to over 45 retail electric providers. With so many different suppliers, each with different rates and contract terms, the choice can be overwhelming. Suppliers can range from billion dollar companies that have been around for decades to smaller niche players that opened their doors just a few years ago.

 

Always check the supplier’s financial strength, the rates offered, and customer reviews. This way, you can get a good idea of what kind of issues other customers with a supplier. The last thing you want is have a billing problem and be with a supplier that doesn’t provide a way to address the problem.

 

All Rates Are Not Created Equal

The hardest part of choosing a supplier is knowing that what you are comparing from Supplier 1 is the same as Supplier 2, 3, and 4. Make sure you are comparing apples-to-apples. You’ll want to consider the “total cost” of electricity bill.  Look at all the costs and fees associated with a rate. For example, there may be cancellation or other service fees listed in your offer.

 

Download Energy Procurement - Greystar Case Study  

 

Topics: Energy Deregulation, Power to Choose, Energy Cost