What makes up your Supply Cost?
WHAT IS ENERGY DEREGULATION?
Energy deregulation is the removal of pricing and competition barriers for natural gas and electricity providers in a given market, encouraging competition and customer choice. Deregulation has taken place in many states and provinces throughout North America. It has allowed competitive energy suppliers to enter the markets and offer their energy supply products to consumers. Energy prices are not regulated in these areas and consumers are not forced to receive supply from their utility. In deregulated markets, consumers can choose their supplier, similar to other common household service providers. Deregulation gives consumers choice - the power of the buyer. A deregulated market allows you to choose your commodity supplier. It also motivates retailers to differentiate their products from the utility and those of competitors by developing innovative features, pricing plans and options that would have otherwise not been available to you.
WHAT IS A BROKER/ENERGY CONSULTANT?
Energy brokers, also known as energy consultants in the energy industry, act as intermediaries between energy producers and energy consumers. These consultants perform job duties similar to real estate brokers or stockbrokers. More narrowly, the domain of energy brokers can encompass either the residential level or the industry level of energy consumers, depending upon the expertise and experience of the broker.
WHY USE A CONSULTANT?
The majority of energy purchases are facilitated by consultants. Reason being, consultants have relationships with all of the top tier suppliers in the market. When they go out to bid, they are able to achieve the lowest price in the market, by facilitating a competition amongst the suppliers. Along with stripping supplier margin, consultants are able to align you with the correct product for your business. With many different products available, a qualified consultant will be able to help you implement an energy procurement strategy. Another advantage to using a consultant is that you will receive an unbiased opinion. Consultants that are supplier-neutral will be able to provide you a full look across the market. They will be able to get you the best pricing, service, and guidance.
WHAT IS A UTILITY?
You're utility company is responsible for the transmission and distribution of your energy. For many customers in New England, Eversource is your utility company. Another example would be the United Illuminating Company. This is the company you'll call if your power goes out!
WHO DO I CALL IF MY POWER GOES OUT?
Although your natural gas and/or electricity supply will be coming from a new source, your local utility/distribution company will continue to ensure the consistent delivery of the energy to your home.
WILL THERE BE A SERVICE DISRUPTION WHEN I CHANGE SUPPLIERS?
No, there will never be a service disruption when changing suppliers.
WHO WILL THE BILL COME FROM?
This depends on which supplier Strategic aligns you with. Most energy suppliers are on a single bill system with the local utility. In this scenario, you would receive one bill for both supply and delivery from the local utility. With a handful of suppliers, you will receive two bills – one from the energy supplier and one from the utility.
WHO ARE THE MARKET PARTICIPANTS?
You can continue to receive service from your utility company, purchase through a supplier, or have a consultant/broker shop for you. There are many types of suppliers. It's key to contract with a supplier with a good history, strong financial backing, and solid reputation. There are also many brokers in the market. Some brokers are very transactional, only offering a price. Often times, brokers will leave out, or "pass through," components of your supply cost. You want to be sure you are comparing apples to apples when choosing a consultant. Strategic Energy Partners prides itself in being an unbiased consultant. You won't only receive a transaction with SEP, but a true advisory service from contract to contract.
HOW IS MY USAGE MEASURED?
A Kilowatt Hour is the standard unit of measuring electricity consumption. More specifically, it is a measure of electrical energy equivalent to the consumption of one thousand watts per hour. Remember, 1000 KWH's= 1 Mega Watt Hour (MWH). When suppliers price out your load, they take many factors into consideration. The first factor is your annual usage, measured in KWH's. Similarly, for Natural Gas, units are measured in Dekatherms. Suppliers request your usage data from the utilities in order to accurately quote your facility.
WHAT IS FIXED PRICING?
Fixed Pricing is a procurement strategy that businesses use to ensure budget stability, and avoid market volatility. Many suppliers and brokers advertise Fixed Pricing, but often times certain components are passed through. Schedule our free webinar to learn about the questions you should ask when getting energy quotes.
WHAT IS INDEX PRICING?
With the index price option, businesses pay the varying market price of electricity for each given hour. This hourly fluctuation provides businesses with the flexibility to adjust their usage to take advantage of market dips. Since the customer is basically absorbing all the risk that the price will fluctuate, there is no variable load cost associated with this option. This hourly fluctuation can make it difficult for some businesses to accurately manage their cost as it relates to the quantity that needs to be consumed for that particular hour.
WHAT FACTORS CONTRIBUTE TO MARKET VOLATILITY?
Extreme weather conditions - Extreme hot or cold temperatures will increase energy demand, driving costs up. Likewise, extreme weather conditions such as hurricanes can disrupt supply and also elevate costs. Economic conditions - Growing economies with increased infrastructure demands drive up energy demand and costs. Poorly performing economies often result in reduced demand and lower costs. Availability of supply - The majority of the energy we use is generated from fossil fuels such as coal and natural gas. This is generally the cheapest form of energy generation. When there is a shortage of these fossil fuels, other more expensive forms of energy generation will need to be used resulting in higher energy prices.
IF I EXIT A CONTRACT EARLY, WILL I RECEIVE A TERMINATION NOTICE?
The majority of commercial contracts Strategic offers do have some form of an early termination fee associated with them. We advise all customers to contact Strategic before breaking any agreement early to verify what penalties will be assessed.