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The Importance of Renewing Your Energy Contracts

February 20, 2020

APPI Energy has been the trusted name in energy consulting for more than 24 years. As an independent energy consulting firm, we strive to help our clients reduce and manage electricity and natural gas expenses through the procurement of competitive energy supply contracts and efficiency measures. As energy consultants, our mission is to offer our clients a comprehensive way to reduce energy expenses and create budget certainty. Now let’s look at why it is so important to enter the energy contract renewal process with eyes wide open. 

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 when starting on the renewal process.  Depending on your load factor we would recommend beginning approximately 12-18 months prior to your expiration date. This allows us time to monitor the market and negotiate on your behalf.  We will look at load factors and monitor the market in your utility to determine the optimal time to lock into a new contract that will begin when your current contract ends.  This way there is no gap in service and budget certainty remains in-tact. 

Why not ask for a contract extension with my current supplier?

Most supplier contracts are not evergreen and will terminate on the last day of the contract.  Additionally, if you simply ask the incumbent supplier for a new contract, chances are, you will be paying a premium.  The supplier will know that you are not working with a consultant to negotiate better pricing for you, therefore, they do not feel the pressure of competition.  Typically, with each new contract that you get directly from the supplier, the more you will be paying as an adder, that is baked into the price they are offering you. 

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 and be sure that the supplier’s fee is not increasing at your expense.  Often in our renewal negotiations, that supplier does not want to lose your business either and they will tighten their margin more 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).  Meaning, your current supplier is able to charge you whatever they want indefinitely, or until you ask to be reverted back to the utility, or you enter into a new contract.  We often see that the price for the subsequent months are close to what you were paying previously and you may not even realize your contract had expired.  Then when you least expect it, your price per kWh may double or triple.  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? 

Renewing only requires a full copy of your most recent electric bill and a signed copy of a Utility Usage Request Form (UURF).  Renewing will allow you to avoid unexpected energy costs, keep budget certainty, and leave you with peace of mind when it comes to energy expenses.

If you want to avoid drastic swings and create budget certainty, 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. You can speak to one of our energy consultants at 800-520-6685 or visit www.appienergy.com to learn more about our services.