What’s your energy procurement strategy? For most small business owners, this is just another item that they purchase for their business. You mark the calendar to shop for your next contract, but may give very little thought to other aspects of it.
Here are four things to think about for your energy procurement strategy, to get the best commercial electricity price for your business.
Understand What Drives the Energy Market
Electricity is a commodity, and the market price fluctuates constantly in response to several factors, including the economy, weather, regulatory changes, political events and power generation mix.
For years, the price of electricity has followed natural gas. That’s because gas was the primary fuel used to generate electricity. As we’ve moved to more renewables in the mix (wind, solar and utility-scale batteries) that correlation isn’t as strong.
In Texas, markets have responded to changes in regulation that introduce more risk and uncertainty in the market. Texas electricity trends are something to monitor.
Timing the market is difficult, especially since your contract expiration date tends to dictate when you shop.
Things to remember:
- The best time to shop for electricity is typically in the spring and fall. Rates are higher in the summer and winter, when usage peaks.
- You can shop rates up to 6 months in advance and lock in a low price for a future start date.
Think Strategically About Power
If power is a significant part of your operations, you need to think strategically about power overall, not just your power price.
For example:
- What’s your load profile (how you use energy over a specific period of time)
- Are there any upcoming operational changes that might impact your energy usage?
- Do you have any sustainability goals to take into account?
- Do you plan to implement any energy efficiency projects?
- Will you participate in demand response programs or voluntary load shedding for grid stability?
Any changes in how much and when you use power need to be taken into account on your next energy contract. Otherwise you could be hit with penalties due to bandwidth violations.
Analyze Your Energy Data
Energy usage data is the building block to planning your energy budget. You can get your historical usage from your utility company or your provider. Depending on your business location, you can also get interval data from your smart meter, to see when power usage is highest.
Evaluating this data helps understand seasonality and how your operations impact usage.
To build out your budget, check future energy prices and delivery fees and incorporate that with your usage history.
Decide Your Purchase Approach
Now that you understand energy trends, have established energy goals for the next year and have analyzed your energy data, it’s time to purchase.
If you are in a market that’s not fully deregulated, like Ohio or Pennsylvania, you can choose to stay with the utility for your power or choose a supplier. For fully deregulated markets like Texas, you will need to choose your supplier.
You may choose to work directly with suppliers. From our experience, unless you meet minimum usage thresholds, there won’t be a significant amount of customer service or assistance. You’ll need to juggle multiple quotes and request updates on price and terms until you sign your agreement.
That’s why many small business owners choose to work with an energy broker. You can shop multiple suppliers online, compare rates and check out contract terms. Prices are updated daily. Once you find a plan you like, you can execute your agreement online.
If that sounds like the winning approach to energy procurement, use ElectricityPlans.com to shop and compare commercial electricity plans for your business.
If you are a medium or large commercial business that spends over $2500 per month on your power, contact our sales desk at 844-214-5559 to discuss your procurement strategy.
