Considering the Ideal Time to Renew Your Energy Supply Contract
Picture this. You’re locked into an energy supply contract. You may or may not be happy with your current pricing and contract terms, but regardless, your contract will come to an end at some point. You have a year or more until that time comes, so you can wait several months or even a year to take action, right? Wrong. Let’s take a closer look at why acting sooner, rather than later, may be to your organization’s benefit.
When should I begin the renewal process with APPI Energy?
This really depends on many of your internal factors and risk levels. We can certainly talk you through the tough questions but generally recommend starting 12-18 months prior to your expiration date. 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.
Why not ask for a contract extension with my current supplier?
If you simply ask the incumbent supplier for a new contract, the supplier will know that you are not working with a consultant to negotiate better pricing and does not feel the pressure of competition, often resulting in higher renewal pricing. Most supplier contracts do not automatically renew but also do not terminate on the last day of the contract. Instead, the supplier will continue to serve your account but no longer at a fixed price. Your pricing becomes variable and subject to ever-changing energy market volatility.
But I like my current energy supplier, why should I leave?
We are not recommending that you automatically leave your current supplier. We will include that supplier in our negotiations, have them compete on a level playing field, and be sure that the supplier’s fee is not increasing at your expense. Often in our renewal negotiations, the incumbent supplier does not want to lose your business and they will reduce their margins if they know they are competing for your business.
What happens if my contract expires prior to me getting a new one?
Should this happen, chances are you will be converted to what the industry calls a Market Based Rate (MBR). Monthly energy charges are tied to market prices but also include whatever premiums the supplier chooses on an ongoing basis, or until you ask to be reverted to the utility, or you enter into a new contract. Keep in mind these bills come after you have consumed the energy, so you have little to no recourse.
What do I need to provide to APPI Energy to begin the renewal process?
Reviewing your options simply requires a full copy of your most recent electric bill and a signed Utility Usage Request Form (UURF). Knowing current market conditions and trends will allow you to avoid unexpected energy costs and leave you with peace of mind when it comes to energy expenses.
If you want to avoid drastic swings and reduce budgetary risk, APPI Energy can assist you in negotiating ideal contract terms and pricing that fit your needs as well as discuss holistic energy solutions that go beyond procurement services.