If you want to shop for an energy plan in a deregulated state, you need to be careful. Many businesses make common mistakes when buying energy. These mistakes can waste time, cause stress, and cost money.
In this, we will cover the top mistakes made related to the following energy contract categories:
Types of Energy Rates:
- Energy Contract Language
- Energy Fraud and Scams
- Using (or Not Using) An Energy Broker
- Only Buying When the Contract Runs Out
- Not Knowing When to Buy
- Not Knowing Whose Bidding on Your Energy
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Types of Energy Rates
There are many kinds of energy plans for businesses. Each business uses energy in different ways. Choosing the right plan can save a lot of money. But there are common mistakes to avoid.
Common Mistakes
Many businesses pick a fixed-rate plan without knowing how it really works. To protect themselves, energy suppliers add extra costs to fixed rates. This makes the price higher. Also, if your business uses energy at cheaper times (like off-peak hours), you may still pay more because of the fixed rate. A custom plan might cost less.
What To Know
The smart choice is to let an energy brokers or consultant check your energy use. They can help you find the best plan. Sometimes a hybrid plan (a mix of fixed and index rates) can save more money than a normal fixed-rate plan.
Energy Contract Language
The details in your energy supply contract are very important. Do not think all contracts are the same. Small differences can change how you are billed in the future. Here’s what you need to know.
Common Mistakes
Many customers do not understand some contract clauses that affect their rates. Clauses like energy bandwidth or contract change rules can raise your costs. If you use more or less energy than the supplier expects, you may pay extra. Other key terms include dual vs. consolidated billing, fees for ending the contract early, and what happens if you cancel, move, sell, or close your business.
What To Know
To protect yourself, ask a lawyer to review your contract. You can also try to negotiate better terms. Focus on bandwidth or swing agreements, how early termination fees are calculated, and which events count as a material breach of contract.
Energy Fraud and Scams
It is very important to know about common energy scams and fraud. These problems are common in the deregulated energy industry. They affect many businesses and can be very costly if not caught early. The good news is that there are steps you can take to avoid them.
Common Mistakes
Some common scams include slamming (when a supplier switches your account without consent), very high variable rates, hidden pass-through charges, and contracts that auto-renew without warning. These tricks are often used, but you can protect yourself.
What To Know
To stop slamming, ask your utility to place a block on your account. To avoid high variable charges, renew your contract on time and know when it ends. To protect yourself from hidden charges or auto-renewals, read your contract carefully before signing. You can also hire an energy broker to help review terms and negotiate with suppliers on your behalf.
Using or Not Using An Energy Broker
Energy brokers can deliver a lot of value when shopping for energy rates. In addition to projecting energy price trends in 2023 or finding reputable suppliers for your energy needs, energy brokers can also manage problems, such as dropped utility accounts or removing late payment charges from your energy bill. Here’s what you need to know when considering hiring an energy broker.
Common Mistakes
Most commercial customers who do not use brokers think they can do it all on their own. They attempt to negotiate with energy suppliers, review contract terms, and even watch for energy market trends without the help of a professional. While some very large users of energy may have energy analysts on staff, the majority of commercial customers cannot afford this. It would benefit from the services of an energy broker.
What To Know
A professional energy broker has direct access to the nation’s leading energy suppliers and can easily obtain price quotes on your behalf. Furthermore, a good energy brokerage company will be able to guide you through the process of choosing a supplier and might even have an inside track on more reputable energy suppliers compared to others. Energy brokers will help you to understand and negotiate the terms of your supply contract and can even come to your assistance when issues arise with the energy supplier.
Only Buying When the Contract Runs Out
If your business only buys energy when your contract ends, you may pay more. Energy prices go up and down all the time. You can lock in prices early, even before your current contract ends. A fixed price model lets you secure low prices in advance. For example, if you still have 36 months left but prices are very low now, you can lock in those rates for your next contract. When your new contract starts, you will pay the lower price, even if energy costs go up later. But if you wait until your contract ends, you take whatever the market gives you. If prices are high, you will pay more.
That’s why many businesses use an energy procurement partner. They track the market, give updates, and make sure you don’t miss savings opportunities. This way, you can focus on your business instead of watching energy prices.
Not Knowing When to Buy
Some businesses try to buy in spring or fall, thinking prices are lower then. Prices often rise in winter and summer because heating and cooling increase demand for natural gas. Since gas is used to make electricity, higher gas prices mean higher electricity costs. Spring and fall are always the best times to buy. But this is not always true. For example, in February 2016, electricity prices were even lower than in the fall before. These opportunities are hard to predict without the right tools.
Not Knowing Who’s Bidding on Your Energy
The market price is only part of what you pay. The supplier sets the final rate on your bill. When you need a new contract, your broker or partner asks different suppliers for bids. They then give you the price and terms to sign. But often, you cannot see how many suppliers bid or what each one offered. Without this, you don’t know if you truly got the best deal.
Today, some technology platforms let you see the auction process in real time. You can watch suppliers compete and drive prices down. You can also see which suppliers made which bids. This gives you proof that you got the best price for your business.
Need Help Buying Energy?
Choosing the right energy supplier for your business is an important decision. There are many factors to think about, such as price, contract terms, and service. Working with a trusted energy broker can make this process much easier. A reputable brokerage with a proven record can save your business time and money. They know the market, understand supplier options, and can negotiate on your behalf. We have helped many commercial & residential customers buy electricity and natural gas at competitive rates. Contact us today to get expert help and the right energy plan for your business.