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5 Common Energy Buying Mistakes and How to Avoid Them

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5 Common Mistakes

Shopping for electricity or natural gas from retail energy suppliers can seem overwhelming.

Adding to the complexity of energy markets is the sheer amount of players involved in the energy procurement process, including retail suppliers, brokers, energy service companies, and several others.

To help small business owners identify a strategic energy procurement approach, we’ve compiled a list of five common energy buying mistakes and how to avoid them.

1. Ignoring the quality of a strong supplier

When choosing a retail energy supplier, it’s important to do your homework. Solicit at least three supplier bids, compare the price components, and request different price configurations. Beyond pricing quotes, look into the supplier’s credit rating, their customer service, and technology offerings. Your best option will be a financially stable supplier that can meet your billing, service and price requirements.

2. Being a bottom picker

Energy markets are fast-moving and complex. Ensure your small business is making informed buying decisions based on recent and historical market data. Our Weekly Energy Market Update can help arm you with the latest information on natural gas and electricity price trends.

3. Setting benchmarks that ignore the market

It’s important to set benchmarks that account for current market conditions. Review your budget and make adjustments as needed. Assess your risk philosophy and determine the importance of price certainty versus low price.

4. Missing a great buying opportunity

Timing is important. Ensure your business is prepared to buy energy when prices are low. Have your internal approvals and targets set far before buying deadlines.

5. Making apples-to-oranges price comparisons

Not every supplier provides the same information or explanation as to how their pricing quote was derived, making it difficult for businesses to identify the best offer. When you are reviewing pricing quotes, make sure you check the length of the contract term and research the product.

To learn more about how to ensure your small business is making informed energy-buying decision, check out our “5 Common Energy-Buying Mistakes and How to Avoid Them” infographic.

Posted: February 18, 2016