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5 Keys to Choosing an Energy Supplier (Beyond Price)

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Choosing the right energy supplier can be crucial for success in your business. While it may seem like an overhead cost to minimize, forming a strategic partnership with the right supplier can help you manage your costs and efficiency from energy supply and beyond. 

Current and forecasted energy rates are an important consideration when choosing a supplier – but they aren’t everything. Here are five tips beyond price you can use to evaluate energy suppliers for your business.

 

1) Reputation and Credibility

With a relationship this important, you must be confident that the supplier you select is financially stable, credible and reliable. A financially stable supplier can offer your organization peace of mind that they will be there to serve you, even amidst the ups and downs of the energy markets. 

Look for a supplier that is fully established across multiple deregulated regions, with years of experience buying and selling in the wholesale markets. When you select a mature and experienced supplier, you open the doors to a customized energy approach that makes the most financial sense for your business – now and into the future.

To find out a little more about a supplier’s credibility and staying power, ask these questions or do a quick internet search:

  • How long has the supplier has been in business and what is its reputation?

  • What are the supplier’s (or parent company’s) current financial statements?

  • What is the supplier’s credit rating?

  • Who are their long-standing customers and what do they say about the supplier?

It may be difficult to quantify the value of these attributes, but it will be very apparent if things go wrong. Remember, your energy supplier will be around for the term of your contract, so choose a solid supplier who also meets your needs.

You can also look for these warning signs that suggest less than reputable suppliers:

  • Rates that are far below the average for your industry and area

  • Unsustainably high rates that make energy unaffordable for your business.

  • Bold claims about reliability with little or evidence to back them up

 

2) Contract Terms

As you decide between suppliers, consider the differences between contracts. While some supplier may allow you to purchase electricity or natural gas month-to-month, most will require you to sign on for a six, twelve, or twenty-four month term. Longer plans often offer cheaper rates, so these can be a good option for established businesses with a set-it-and-forget-it mentality. You should also consider whether there’s a benefit to purchasing multiple commodities as a bundle from the same supplier.

Look to contract terms to understand cancelation fees or other barriers to switching suppliers. Likewise, it can be helpful to know upfront whether your contract will auto-renew, expire onto a month-to-month variable rate or require you to choose a new rate. Most suppliers won’t automatically shut off the lights, but you should be clear on whether you’ll need to take action to keep the same price and terms.

You should also ask your supplier what is required to start new service. Do they need documentation from you (last month’s energy bill will usually do the job) and should you expect to have a service outage during the switch? How they will help you make the transition to their services?

 

3) Renewable Options

More businesses are addressing corporate responsibility and looking for ways to offset the environmental impact of their own operations – including energy usage.

In many regions, you can choose to purchase some or all of your energy from sustainable and renewable sources. A reputable supplier will be able to provide you with choices on the types of alternative energy, and sometimes even pinpoint the source or region of generation. 

Renewable energy certificates (RECs) are a great option, particularly for small businesses that can’t invest in generating their own energy through solar arrays or wind turbines. Look for RECs that are certified by an independent third party, such as the Center for Resource Solutions or Green-e. 

On-site generation may be appropriate for larger businesses, and can help you minimize up-front energy costs, reduce your carbon footprint, and potentially scoop up tax credits or incentives in certain states.

4) Customer Service & Strategic Support

Ensure that the supplier you choose offers an exceptional level of post-sale customer support. An experienced supplier will provide ongoing education to your organization about price and the energy markets, if applicable; offer decision-making tools and resources where helpful; and proactively recommend savings programs and opportunities, particularly those related to energy efficiency.

It can be insightful to ask questions about who will be managing your account. When will customer support be available and through what means – phone, online chat or face-to-face? And are there any fees associated with customer support?

For businesses with a large or complex energy portfolio, a trusted supplier should provide a dedicated account team to help drive the success of their energy strategy. For these large commercial and industrial businesses, your account manager should be more than a salesperson – they should bring a deep knowledge of the energy industry to the relationship, as well as a strong desire to help you reach your energy budget targets. They should be ready to respond quickly to questions or requests and have data about your business’s usage at their fingertips, since energy markets and pricing change often. 

The size of your business and energy consumption will determine how much support you may require. But a reputable supplier should be able to cater to your individual needs, from simple monthly bill pay inquires to strategic, year-over-year energy management plans.

 

5) Supplier Serves Businesses Like Yours

Different industries and sizes of organizations have unique energy needs. Your energy supplier should understand those distinctions and have experience helping businesses like yours succeed.

Small businesses, which tend to have little room in the budget for flexibility, may value an energy strategy that is predictable, stable and easy to manage. With energy goals focused around reducing costs and gaining budget certainty, small business owners often depend on a supplier who can deliver good prices and energy expertise so they can remain focused on their business. Fixed rates may give these small business energy buyers peace of mind because the price for the usage portion of the bill will never exceed the price agreed upon in the contract.

Large businesses with larger budgets may look for opportunities for investment-style energy spend. Of you can tolerate greater risk, you may be able to capitalize on market lows when prices are good, and create a competitive advantage. A total energy management approach integrates a suite of energy products with ongoing advice from energy experts to design a custom, nimble strategy that takes advantage of both supply and demand-side factors.

Your strategy and goals also may vary based on your industry. For example, industrial manufacturers may prioritize reducing energy use by optimizing operational schedules for off-peak hours and participating in a demand response program. Conversely, supermarkets and grocery stores may look to reduce energy costs by improving the efficiency of lighting and refrigeration equipment. Governments and agencies may favor working with a supplier who has renewable energy options and can help them deliver energy budgets and strategies transparently to their many stakeholders.

 
So when you’re shopping for an energy supplier, look for signs that a supplier understands the needs inherent to your industry and serves other businesses with a similar-sized energy budgets. They may offer this information up to you in the form of case studies, testimonials or even by putting you in touch with a current customer who can speak on behalf of their experience working with that supplier on a customized energy procurement plan.

 

 Want more? Download our energy cheat sheet now so you can reference it any time you're researching or shopping energy.

Posted: March 01, 2018

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