Navigating Electricity & Natural Gas Procurement
When it comes to electricity and natural gas procurement, organizations located in deregulated states have a choice. Whether your organization is currently working with a competitive supplier or through the local utility, it’s prudent to take stock of the choices available to help your organization meet its specific budgetary needs, weigh the options, and make an informed decision on your energy supply contract. Let’s take a closer look at what deregulation means for your business, as well as where to turn and when to act.
Deregulation 101: Regulated vs. Deregulated
We’ll start with the basics: regulated vs deregulated energy markets. In a regulated electricity market, a single company, normally the local utility, owns all the infrastructure — the physical stuff that stores and distributes energy, like power lines, pipelines, or transformers. That same utility is also responsible for buying or generating the energy, selling it to you, and distributing it to your facility or home. If you have a power outage or need service in a regulated market, the utility is responsible for those issues. But you are out of luck if you want cheaper electricity because the utility offers only one price.
However, in a deregulated electricity market, while the utility still owns all the infrastructure and delivers the energy, you can choose to shop around and buy your electricity or natural gas from a licensed energy retailer that does business in your market. Competitive suppliers offer many options to tailor your energy buying strategy based on your personal or company goals and the utility is obligated to provide the same level of service to all customers if an outage does occur.
Finding a Trusted Source (& Supplier)
As you consider energy choice and your current energy supply contract (and as you field calls from both brokers and suppliers encouraging you to consider a new supply contract) the first question you may have is: why switch? Pricing is typically the first reason that comes to mind, but there are a number of other reasons as to why you might consider a new supplier. Common Reasons Include:
- You’re looking for minimized budgetary risk or budget certainty
- You’ve been experiencing unfavorable contract terms with your current supplier
- You’re interested in reducing your carbon footprint by partnering with a supplier with a larger renewable footprint
- Your current supplier isn’t meeting your expectations or has exited the market
- You’re looking for better customer service
- You’ve incurred unexpected price adjustments during the term
- You’re interested in on-bill financing or efficiency/sustainability projects
- You would prefer to switch to a more financially stable energy supplier
- You are hoping to use the same supplier for both gas and electric
Acting at the Right Time
Once locked into a supply contract, the work doesn’t end there. No matter the length of your contract, renewal is always hovering on the horizon, and should not be overlooked. A common question centers around when to begin the renewal process for your supply contract. This really depends on many of your internal factors and risk levels. APPI Energy can certainly talk you through the tough questions but generally we recommend starting 12-18 months prior to your expiration date. Oftentimes it is beneficial to look as far out as 24 months. This allows us time to monitor the market, negotiate on your behalf and help you buy when the time is right. We will look at your unique situation, including your usage history and load profile, and monitor the market in your utility area to determine the optimal time to lock in a new agreement that begins when your current contract ends to ensure there is no overlap or gap in service, further reducing budget risk.
Ready to explore your options? Chat with our team here online, connect with us via email at info@appienergy.com, or call 800.520.6685 to connect with an Energy Consultant for a complimentary assessment.