The Power of Negotiating Your Commercial Energy Contract
Are you paying too much for the energy so vital to your business operations? You may be able to negotiate with your provider for better pricing and terms.
What is an energy contract?
An energy contract is an agreement between your company and your energy service provider that establishes rates and terms of service.
If you’re doing business in a state with deregulated electricity or natural gas, you have an opportunity to develop an energy strategy that includes negotiating your energy pricing plan. If your business is located in an area with a competitive energy market, you have the option to choose a retail energy supplier instead of sticking with your local utility. By selecting a retail distributor, you can procure your electricity and natural gas tailored to your business’s needs.
In most cases, very small consumers may have no choice or, at best, a choice among standard offers. The larger your consumption, the more significant the impact of your negotiations.
When done correctly, this strategy can result in better energy cost management. When done poorly, you’re leaving money on the table.
There is a lot more involved in making decisions about an energy pricing plan than simply comparing rates.
Two significant pitfalls in effective energy pricing are:
- Difficulty comparing the pricing offers from competing energy suppliers. Not every supplier provides the same information or even explains how they derived their pricing quote, making it hard for you to identify the best offer for your business quickly.
- Lack of understanding of current and anticipated market conditions. A multitude of variables affects market pricing, including seasonal cycles and periods of extreme volatility. Factors that influence market volatility include severe weather, government regulation, power plant outages, source fuel prices, and geopolitical events.
What are your options?
- You can attempt to navigate the minefield yourself. To do this, you’ll need to learn everything you can about the energy market, certainly who the players are, what affects the market, and how to negotiate contract rates and terms.
- Or you can depend upon a Commercial Energy Broker. The right broker will have mastered these things.
Consider an energy broker if you’re concerned your business is overpaying for energy costs, and you want to start controlling your energy costs.
What to look for in the right energy broker
The right broker is the one who really knows his business. This broker will have a team of experts:
- With years of experience reviewing and negotiating contract agreements from numerous potential retail suppliers
- With positive reviews (testimonials) from past and current clients
- Who understands your business and helps you in strategic planning by assessing both your current and future energy needs
- With connections with well-established, creditable energy suppliers
- Who offers a solid array of services to maximize the cost-effectiveness of your energy profile
- Who values you as a client and demonstrates this by providing outstanding customer service
What kinds of businesses benefit from energy contract negotiation?
Here’s a short list to give you food for thought:
- Property management companies
- Retail stores
- Manufacturing facilities
- Office buildings
- Parking garages
Take a look at your energy bills and consider where your energy costs fit into your overall business strategy. The right energy consultant can make a positive difference in your bottom line.