5 Things Your Electricity Provider Doesn’t Want You to Know

Now that energy markets have been deregulated and power suppliers have to compete with each other for your business, things have gotten…a little complicated to say the least. To make their prices look as attractive as possible, providers are playing some funny games with rates and fees and hidden “ancillary charges” Here are a few things they hope you don’t notice until it’s too late.

1. The quote you receive doesn’t always include hidden “ancillary charges.”

Let’s face it, if you have been in a deregulated market very long, you’ve probably found the price quoted doesn’t always match the bill.

Providers are competing on the base rate (kWh). The standard charges over and above the cost of energy are the delivery charges, PUC fees and taxes. These should all be known up-front and are supposed to be “pass-through” charges, in other words passed through with no mark-up. But what they don’t tell you can be huge. In some cases the provider may choose to inflate these charges to the customer, or add ancillary fees not included in the original quote. Buyer beware.

2. You can save money by signing a new contract up to 2 years before your contract expires.

If your contract expiration date is looming, this is not the best time to make a decision on your electricity. You might be forced to accept the current market price, which is higher than you like. Providers can play on customer’s fears of a power outage and pressure them to sign contract they regret. What they don’t tell you is that you can start the process long before the urgent takes precedent over the important. When market conditions are favorable, you can write a new contract for up to 2 years before your contract expires, thus locking in a lower rate.

3. Loyalty to the incumbent provider can cost you.

Your company’s current provider is in the energy business and knows that clients switch regularly. It’s a natural part of being in a deregulated environment. Don’t stick with your provider out of a sense of loyalty or misplaced idea that he’ll automatically work to get you the best price. Do your research and get several prices. If you want to be loyal, give your current provider a chance to beat the best price you find.

4. Talking to multiple providers makes good business sense.

Just like it is for most things, it pays to shop around for electricity. Most people don’t… because they think it’s too difficult and time consuming. That is a real concern, but if you place this in the hands of a reputable electricity broker, they can do all the legwork for you. Don’t put all your eggs in one basket.

5. Brokers bid out your usage to several providers, thus securing a very competitive rate.

A broker will do the heavy lifting for you. He’ll talk to his provider contacts, negotiate rates and get multiple bids based on your usage history. In effect, the broker causes a “bidding war” for your electricity contract. And when that happens you can rest assured you are getting the most competitive price available.

Conclusion: In a deregulated energy market like yours, it’s almost impossible to keep track of all the pricing games…and to know all things the providers would prefer you didn’t know. Fortunately, there’s a better way. A competent energy broker can insure that you have all the information you need to make the wisest choice. An energy broker is not loyal to any one provider. They work for you to develop an energy management strategy that’s best for you. And, best of all, it doesn’t cost you anything to work with a broker.

Since 2002, as one of the industry’s most respected brokers, Texzon Utilities has helped companies of all sizes make well informed, strategic decisions regarding their energy purchases, producing savings that track to the bottom line.

Aggregation Groups: One Size Does Not Fit All

The original purpose of aggregation groups was to get different energy suppliers to competitively bid against each other to provide the group with the lowest rate. However, in today’s energy climate, it doesn’t always work out the best for every participant in the pool. Here are some of the pros and cons of energy aggregation.

Pros:
  • Group administrators buy energy in bulk, so you could achieve savings you may not have been able to get on your own. There is a perception that all members benefit equally.
  • You are part of a large group so you feel comfortable, and it doesn’t require expertise in the energy markets. There is a perception of strength in numbers.
Cons:
  • Aggregation does not always yield a more favorable price: The final contracted rate may be higher because of the inherent constraints of working with so many different variables in a group buy.
  • Lack of Control: The group administrators choose the energy supplier, and make the final decision, not you.
  • Less Competition: Because of the complexity of the large deals, energy aggregation is limited to fewer providers. This decreases the amount of competition.
  • Less Flexibility: You are obligated to accept the group rate and term with no negotiation and few options, even when a lower rate or better term could be available to you outside the pool.
Beyond Aggregation? Texzon’s KiloSmart™ Program.

The game is changing. Today’s volatile energy markets are like the stock market, with prices changing hourly. In this climate it is challenging enough to manage energy procurement for one entity without leaving money on the table. Aggregation makes that job even more difficult, especially when the usage volume of each individual participant can vary greatly.

That’s why many of our customers who formerly participated in aggregation groups have found increased flexibility and bigger savings with Texzon. By implementing our strategic plan of staying ahead of the market, getting multiple competitive bids, and making informed, quick decisions when the market dips, Texzon customers are able to strengthen their position, limit risk and save money.

How Texzon’s KiloSmart™ Program works:
  1. Develop a procurement strategy. The unique size and shape of your load, current contract terms and future budgetary needs are all taken into account in developing a procurement strategy.
  2. Research the market. Texzon calls upon a multitude of sources to ascertain the state of the energy market, the latest pricing trends and important legislative or regulatory developments. These all help determine the best time to buy.
  3. Negotiate a Strike Price. Once a strategy is established, Texzon leverages its long-term relationships with multiple providers, conducting an internal RFP. With several suppliers competing for your usage, the result is a negotiated target price.
  4. Make informed quick decisions. When the agreed-upon and validated strike price is reached, a buy order can be initiated, assuring the customer that the timing of the buy, the per kWh rate and length of term all meet their exact criteria.
  5. Provide ongoing market intelligence. Texzon constantly monitors the energy markets, keeping the customer informed of trends or developments that could affect their energy program, and making recommendations on actions they should take.

There are over 300 electricity providers in the U.S., but only one Texzon Utilities. Since 2002, as one of the industry’s most respected brokers, Texzon Utilities has helped businesses of all sizes make well informed, strategic decisions regarding their energy purchases, producing savings that track to the bottom line.

5 Ways an Independent Energy Broker Can Benefit Your Business

With the current competitive environment in deregulated electricity, it’s no wonder most people who purchase commercial electricity are tired of pushy “energy sales guys” who come calling around renewal time. If you don’t need the hassle but also want to be assured you find the best deal for your business, there is an option you may not have considered. Your answer may be an Energy Broker: An independent and impartial third party who will do all the legwork for you and save you money.

These 4 questions may help you determine if you need a broker’s help:

  • Do I really have the time required to do a thorough job?
  • Is energy purchasing a top priority or an unwelcome distraction from my core business?
  • Do I have the in-depth knowledge to make a cost effective deal?
  • If the deal goes wrong, would I know how to get it back on track?

There are 5 major ways in which an independent energy broker can help your business:

1. Brokers provide in-depth market expertise.
Do you use outside sources for legal counsel, accounting, or IT? You do this because it’s either too difficult or because you found it saves money. Why would you treat energy procurement differently? Does your in-house person have the time or experience to make the best decisions?

2. Brokers provide strategic direction.
Energy brokers do more than just find the lowest rate. By taking the time to  understand the complexity of your operations and future business needs, they ensure that your energy contracts will deliver cost savings for the long-term, not just meet the needs of finding the ‘cheapest’ contract rates on the day your renewal is due.

3. Brokers can handle the complex task of buying power in deregulated markets.
There are over 100 Retail Electric Providers in Texas. Knowing which supplier has the right commercial requirements for your business is a complex task. Timing is critical, as wholesale energy prices constantly rise and fall. Monitoring the market for dips can make a difference of thousands of dollars.

4. Brokers force competition and use their leverage to get better pricing.
When energy suppliers are forced to compete for your business, you save money. Many suppliers will offer a different/lower price to brokers as compared to giving a customer a price directly, simply because they know they have to compete for the business. This drives the suppliers margin, as well as your final price, downward.

5. Brokers take a personal interest in your business.A broker is your friend in the energy business. As your agent in the market, they keep your business in mind 12 months out of the year, not just renewal time. They look over your contract and first electric bill to ensure you are being charged the right amount for the energy you use. If a dispute arises, your broker can help resolve the matter on your behalf.

Why call an Independent Energy Broker?

It’s cheaper. It’s easier. It’s less time consuming.

Since 2002, as one of the industry’s most respected independent brokers, Texzon Utilities has helped companies of all sizes make well informed, strategic decisions regarding their energy purchases, producing savings that track to the bottom line.
Go to texzon.com to learn more.