Sep 13, 2017 | Trends

Don’t Let Energy Purchasing Intimidate You

So many energy suppliers and consultants claim they are the best option for purchasing energy. How can you evaluate who is best, other than running an RFP and comparing everyone’s pricing?  Furthermore, even if you decided to compete your energy purchasing, would you be buying on the right day? Would you vet the proper suppliers? Would you select the best contract terms and conditions?

There are various details involved in managing and buying energy that will make the difference between a great deal, a good deal and a bad deal.  It is quite similar to hiring an accountant to do your taxes, a financial manager to handle your retirement accounts, or a healthcare broker to manage your company’s benefits.  Energy is a large expense for most businesses, and one that requires active management and optimization in purchasing.

Decisions about who to choose will always be made on a comfort level and who you think will best represent your business.  Some of the items to consider and might be red flags for your current way of purchasing are:

  1. Using the same supplier for multiple years. The best suppliers are constantly changing and need to be competed;
  2. Not hearing from your supplier until 60 days prior to your contract expiring. You should be buying when market conditions are low; not only when contracts are expiring; and,
  3. Being a budget sensitive customer in a variable contract. This is another red flag as your rep has not executed properly to provide budget certainty.

As with any aspect of your business, you can assume as much of the responsibility as you wish, but it is best to evaluate your needs and the role you wish to assume, and find a company that will complement your involvement.  There are full service consultants, such as Albireo,  that will handle everything from A-Z, including purchasing, budgeting, energy efficiency, benchmarking and reporting. There are also direct suppliers that will sell you a commodity product and you can assume the other responsibilities yourself.

There are no one size fits all answers, but it is important to know your options and determine if you are getting what you need from the marketplace.

While the deregulated markets are powerful tools for budget stability and price protection, beware the cold callers or door knockers who represent themselves as the utility solution, guarantee future savings over the utility rates, or are pitching you one product as your only available option.  Many of our markets have dozens of options and the variables are continually changing. So find your proper fit and select someone who will represent you well.

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