Most businesses recognize the advantages of switching energy suppliers to access the best prices.
The problem is, having the time, resource and expertise to find the best deal is an impossible task. It requires an in-depth knowledge of the energy market, complex pricing structures, and many energy suppliers with differing contract terms.
Doing the energy analysis on your own is possible, but it’s a lot of work. Here are four suggestions to ask yourself to help determine if you are better off managing your energy needs alone or outsourcing.
- Do I have the time required to do a thorough job?
- Is energy a large part of my cost base, or could I be more useful running my core business?
- Do I have the in-depth knowledge to make a cost-effective deal?
- If the deal goes wrong, would I know how to get it back on track?
If you are completely satisfied with your current supplier, have a long-term fixed contract, and/or understand how to monitor and analyze the wholesale energy market, you may be okay to continue administering your own energy contract. If not - you should read on.
Five ways energy brokers can help your business
1. Brokers can get better pricing
When energy suppliers are forced to compete for your business, you save money. When someone is selling a product (whether it's a car, a necklace, or electricity), their offer price is affected by competition. No competition…..the price will be higher.
Brokers FORCE competition. Many suppliers will offer a lower price to brokers because they know they are competing for the business. This drives your price, down.
Another reason suppliers give brokers better pricing is because the larger brokers are placing many customers with suppliers. When a customer goes directly to a supplier, the customer's one contract may come up for renewal only once every year or two. Compare this to brokers giving them the opportunity to bid on dozens of customers per month…who do you think is more likely to get a better price?
2. Brokers provide in-depth market expertise you may not have in-house
Think about the professional areas your business currently outsources. Depending on your size and type of organization, you may employ outside legal counsel, accountants, IT consultants, or marketing agencies. You do this because it’s either difficult to hire this expertise on a full-time basis, or you found you can save costs by outsourcing it. So why treat your energy procurement any differently? Does the in-house person responsible for your energy procurement have the time or experience to review all the different energy products, read through and understand each energy contract’s small print, keep abreast of changing energy markets, perform due diligence on the various suppliers and look for ways to lower energy consumption?
3. Brokers can provide strategic direction
Energy brokers do more than just find the lowest cost energy. The best ones will take the time to understand the complexity of your operations, future business requirements, and resultant energy demands. They will then formulate an energy procurement and management strategy to meet these needs, including risk management considerations if necessary. Only then will they recommend the best suppliers and energy contracts to suit your objectives. This approach will ensure that your procurement contracts will deliver cost savings for the long-term and not just meet the needs of finding the ‘cheapest’ contract rates on the day your renewal is due. A reputable broker uses market knowledge and energy purchasing experience to save you time, money and resources by:
- Compiling data to approach the supply market
- Searching the market for the most suitable gas and electricity contracts for your business
- Guiding you as to the drivers in the wholesale market to choose when to buy
- Negotiating prices and contractual terms on your behalf, clarifying terms and conditions
- Giving recommendations to guide your choice of new contract term, supplier, rate structure, etc...
- Obtaining credit clearance
- Setting up and managing multi-site contracts
4. Brokers can handle the complex task of energy procurement
Over 100 companies supply energy in Texas alone. Nationally there are many hundreds, each with their pros and cons. A few suppliers dominate the market, but many smaller suppliers can get creative in their energy offerings. Knowing which supplier has the right expertise and commercial requirements for your business is a complex task.
Energy suppliers also differ in the energy contracts, or ‘products’ they provide, each offering fixed contracts, flexible contracts, variable rates, block pricing, peak and off-peak, green energy and hybrids of the above. Each supplier will give slightly different terms and conditions for each contract and these will often contain clauses that can affect the final cost of the energy you buy. These will depend on wholesale gas and electricity prices at the time the prices are given and reflect different views of the future changes. Energy brokers are dealing with these complexities daily and are therefore able to analyze the energy market and provide detailed feedback on your best options in as much detail as you require.
The final complexity is timing – this is arguably the one element that can make most difference to costs for business energy users. As wholesale energy prices constantly rise and fall, monitoring the market for dips can make a difference of thousands of dollars. Large energy brokers will have the market intelligence resource and wholesale market monitoring software to enable customers to lock in at advantageous times.
5. Brokers can handle time-consuming management of supplier contracts
Energy brokers will monitor your supplier contract and bills to ensure you are being charged the right amount for the energy you use. And if disputes arise, your broker can help resolve the matter on your behalf. In addition, brokers stay ahead of the fast-changing world of the deregulated energy market by keeping track of regulatory changes, the latest technological advancements, and new charging structures.
Three advantages of working with an energy broker
It’s cheaper
Energy can be one of the biggest expenses for businesses, and prices continue to rise. An energy management consultancy can help you pay less and use less.
It’s easier
Not everyone is an expert on energy prices or the energy markets. Using a professional energy broker gives you access to market expertise without carrying the overhead in your business.
It’s less time-consuming
Managing bills, contracts, and suppliers can be complicated. An energy broker can do this for you, so you don’t have to worry about making mistakes.
