Shopping for business electricity in Texas can be a challenge. But you can avoid common mistakes businesses make in energy procurement by knowing what to look for.
Most mistakes are simple oversights. Don’t treat electricity procurement like it’s just another purchasing decision. These can be complex contracts and it’s important to avoid these errors.
1. Not Knowing Your Business Electricity Usage and Pattern
This is the first of our business electricity mistakes: not understanding your usage. Before you start shopping, you should know some things about your business electricity bill. That includes:
- Historical monthly usage – you can get this by logging in to your online account with your Retail Energy Provider (REP) or from SmartMeter Texas.
- Monthly demand – how does your demand change throughout the year?
- Peak Demand – What’s the most power you use throughout the year?
- Load Factor – Do you use a consistent amount of power throughout the day or throughout the month? Or do you have “peaky” usage that may be unpredictable? Your load factor and shape come in to play in pricing. High, medium and low load factor pricing will be different. (Most small businesses are low load factor.)
Getting organized is half the battle when you’re shopping for business electricity.
Download this electricity procurement checklist to get all of this data organized. Then use ElectricityPlans.com to shop for business electricity rates.
2. Not understanding how your demand impacts your commercial electricity bill.
Our second of the business electricity mistakes? Not understanding demand charges.
When reviewing your commercial energy bill, it helps to understand the various charges. Of course there will be charges for your electricity supply from your REP. And there will be charges from your delivery company also known as your transmission and distribution service provider (TDSP).
But if you have a demand charge? Demand is an area you can focus on to lower your commercial electricity bill. And a top mistake in Texas business electricity shopping is ignoring your demand.
Demand is based on the highest amount of electricity that you use in a given month. This is usually during the daytime when everyone is home and using appliances. The demand charge is meant to cover the cost of having the power available to meet this high demand.
Your demand charge in Texas is set based on 4CP (4 coincident demand). Your 4CP is the average of your company’s usage peaks during the highest grid peak hours during June, July, August and September.
If you consume less power during these hours, you can significantly cut your total electric bill for the coming year.
Because not only can you cut your demand charge? That demand charge also determines what tariff you fall under for TDSP charges.
3. Taking the renewal offer from your current provider without shopping.
Mistake number 3 on our list of business electricity mistakes: not shopping for your electricity.
You may like your electricity company. You may even love the convenience of having set up auto pay for your business utility bills.
But taking the renewal offer from your current business power provider means you will pay too much.
And you’ll pay more and more each year.
That’s because they take you for granted. They may offer you a fair price. But more likely they will charge you a higher price than what they charge new customers. They will put just a little bit more margin on your pricing to line their pockets with more of your hard earned cash.
The better approach? Shop business power rates online to see what the market pricing is.
Only by comparison shopping can you see if you are getting a good deal. And if you can get a better rate from a different provider? Switch to a new electricity company. And do it every time your contract comes up for renewal. That’s how to get the best rate.
If you really want to stay with your electricity provider, you can comparison shop, then contact them with your findings. See if they will match that rate. And if not? How much do you like them now?
Compare Texas Business Electricity Rates Near You
4. Not shopping in advance of your contract expiration date.
Coming in at number 4 on our list of Texas business electricity mistakes? Not shopping in advance of your contract expiration date.
You can shop online for business electricity up to 6 months ahead of your contract expiration. Just pick the start month for your new contract and you can see the rate. It’s almost like a crystal ball looking into the future.
So shopping in advance helps you lock in affordable electricity rates for your business.
The other big mistake on contract expiration date? Forgetting to shop for your electricity contract and letting it go on a month to month variable rate. We get it, we know business owners are busy. But variable rates are the highest rates you will possibly pay. Make sure you shop for a new business electricity rate before your expiration date.
5. Not reading the fine print in the contract.
And our final Texas business electricity mistake? Not reading the fine print.
Thankfully, small business owners are largely protected in Texas. The Public Utility Commission of Texas defines a small commercial customer as “A non-residential customer that has a peak demand of less than 50 kilowatts (KW) during any 12-month period.”
If you are a small commercial customer, you are given protections similar to what a residential customer receives. You’ll receive an Electricity Facts Label and Terms of Service with your contract agreement. You’ll be protected against any changes in your fixed rate agreement, except in cases of change in law.
Small commercial customers can shop online in Texas to compare electricity prices. And you can review the full contract agreement before you sign. You also have a three day right of rescission if you change your mind on the switch, just like a residential customer.
But if you are a large commercial customer with peak demand over 50 KW? You’re in a different category.
For you, it’s very important to read the fine print in a contract. For example, in February 2021 after Winter Storm Uri, some commercial customers discovered that their provider could pass through ancillary services in the tens of thousands of dollars.
This is one reason that you should work with an electricity broker to shop for your power. An electricity broker or consultant can help identify the fine print items. And they can steer you toward low prices and reputable companies.
Larger businesses that have 5+ meters, spend over $2500 a month or have demand over 50 KW can contact us directly to shop for custom rates. And we can help you evaluate contract language. Give us a call at 844-214-5559 or complete a custom quote request.
And that, in a quick summary, are the 5 mistakes businesses make when shopping for commercial electricity in Texas. We hope that you can use this information to get the best electricity rate for your business. Want more in-depth information? Read our article on How to Shop for Business Electricity.
