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All About Energy

How to Select the Right Energy Provider in 6 Steps or Less

Will McGinnis Aug 22, 2018 12:00:00 PM
Will McGinnis
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Energy Provider 6 steps (1)As a medium- to large-sized business, you have many choices when it comes to choosing an energy provider. How do you select the best energy provider for your business? There are several important factors you must consider before answering this question and there is no ‘one size fits all answer’. To find the best fit for your business, you have to spend a little time analyzing your options.

Things to consider when choosing an energy provider:

 

  1. Do you have multiple locations? Not every energy provider is permitted to sell in all locations. This reality is most evident with the stark differences between deregulated markets, where you can choose from a list of providers and regulated markets, where there is only one option. Different locations have different energy rates which also change based off of the energy demand and usage of both your company and the territory or region, where your facilities are located.
  1. What is your budget? Be sure to consider your long term and short term budget. You’ll be able to better align your risk tolerance with your energy strategies. There are numerous products offered by each supplier with each one having more, or less, risk than the next. Choosing an all-in fixed product with limited or no pass-through charges may suite a smaller business with only one location. Providing you with more predictability and security during market volatility. Or if you are a large energy user such as a manufacturing plant, you may choose to be on a type of index product which allows for more savings given your high usage but leaving you open to risk during times when the market starts to jump. Your energy consultant can help determine your best product based on your energy goals.
  2. Where are the locations? Where your business sits physically is also important. Geographically speaking, some areas cost more as they impact the production of energy. For example, it is harder to produce energy in hot climates than it is in colder climates. How far your business is from the nearest transformer and what kind of transmission line it’s connected to are also important in determining your energy costs. Line loss, which is the dissipation of energy as it’s transmitted across lines, averages between 5-7% in Texas, but will change dramatically depending on these factors. Based on this information, a commercial customer in Midland, TX may have larger transmission and distribution costs than the same size business in the northeastern United States such as Pennsylvania.  
  3. Are you in one state or multiple states? Buying energy between states is complex. Not only are different states governed by different regulations, but the distance from the power plants also vary as do climate and other factors that impact the cost of energy. An energy consultant can help sort out all of these issues and help choose the provider best suited for your situation and energy strategy.
  4. How do you know you are getting the best rate? Rates are determined in complex ways and they are very buyer specific. The best rate is not just about the cost of energy, but when you buy, when you use it, and when you plan appropriately for it. It’s essential that you fully understand the product you purchase; for some, time-of-use is absolutely critical and others it’s only a small factor. Tiered rate or Index products require a lot of attention and management to ensure the best possible rate, where as a fixed rate product requires almost no intervention during the term of the agreement and can rest on timing and Demand charges.  The amount of time you can commit to managing your energy demand is important to consider.  Before making this decision, you have to consider how much you need and how that need changes based on the time of day you use it, the time of year you use it, and how much energy your business will need at peak times.
  1. Should I use a consultant? Utilizing energy consultants allows you to bring in a team of experienced professionals in the industry that handle energy management on a daily basis. Most consulting teams have relationships with providers that allow you to truly get a competitive bidding process for a product specific to your energy goals and strategies. More experienced and advanced energy consultants also utilize their knowledge and historical data from your energy profile to better understand your energy footprint. This is key to establishing benchmarks and baselines for future energy strategies.

So who is the best energy provider for your company? The process of answering that question is very complex. Incite Energy can help you identify and navigate the obstacles that your company faces so that you can see the best rates for your energy and the best product suited for your energy strategy and goals.


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Topics: Energy Provider, How To, Energy Contract