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The Evolution of Fixed Energy is Here

By Direct Energy Business
The Evolution of Fixed Energy is Here

Fixed price solutions are common for large businesses that want to mitigate market exposure, lock in a price for a long term and minimize day-to-day involvement. It’s a sound, traditional choice.

The problem? You’re missing out on opportunities to reduce your total bill. In many cases, it doesn’t take much effort, and you may be able to seize savings because of something you already do.

It’s the 21st century and energy management is changing. Procurement strategies that don’t take demand reduction into account – like traditional fixed price offers – can’t compete in the long term.

That’s why Direct Energy Business is introducing a new electricity solution for large businesses called Fixed Energy Plus™. With this modern take on a fixed price, you can lock-in a supply rate without forfeiting opportunities to benefit from your energy efficiencies.

Here’s how it works

Your electricity bill consists of two essential parts – supply costs and pass-through charges. What’s unique about Fixed Energy Plus, is that it’s built to manage both costs. You get the benefit of a fixed supply rate, but have control over and visibility into your pass-through charges.

What’s more, we’ll send you alerts about reducing energy usage when it matters most – on forecasted peak load days on the grid. Using less energy always helps you save, but doing so on peak load days can significantly lower your pass-through charges in the future. 

Pass-through charges can transform your bottom line

Depending on your location, you’ll see up to three pass-through charges on your energy bill: capacity, transmission and RMR. They are set yearly by the independent system operators (ISO) or regional transmission organizations (RTO) in your area, and are calculated based on your electricity usage during the peak load days of the previous year. That’s why they’re also known as “demand-based” charges.  

As you can see, they make up a pretty sizeable portion of the average energy bill: approximately 25 to 45 percent.

 
 
 
 
 
 
 
 

Remember that perk we mentioned earlier about peak-load notifications? That’s where Fixed Energy Plus makes a big difference. If you lower your usage during those peak load days (which we’ll tip you off about), it can pay off over the next year with lower pass-through charges. It’s like having your cake and eating it, too. 

Be cautious with fixed rate comparisons

When you compare fixed price options, make sure to pay attention to pass-through charges. Some suppliers include them as part of the fixed rate. But when pass-through charges are forecasted and locked in for the length of an energy contract – often several years – you end up paying a premium on them and missing out on year-over-year savings from your peak load curtailment.

It can be easy to overlook or misunderstand this part of an energy supply contract. But managing what you’re charged for pass-throughs can translate to thousands of dollars in savings if you curtail.

For many businesses, energy efficiency is part of the strategy, so you’re already putting thought into curtailment. We think you might as well earn a budget incentive for doing it.  

Is a traditional fixed rate really fixed?

The truth is that traditional fixed rates with “all-in” price tags often do saddle businesses with unexpected costs. If demand-based charges are wrapped into a fixed rate, but an ISO or RTO changes their formula, suppliers regularly pass the difference on to their fixed price customer. That’s an unwelcome surprise to businesses that depend on budget certainty. 

With Fixed Energy Plus, we’re promising transparency about what you pay. Each charge gets its own line item, and there’ll be no surprise pass-through charges mid-contract.


Commercial energy prices are low, but your bill isn't getting cheaper. Find out why in our report about the changing energy landscape. Download the report 


The Balance of Power Has Shifted to You

Fixed Energy Plus customers in the PJM market will also have access to our signature PowerRadar™ software for free. With this proprietary platform, you can turn your existing utility meter into a real-time power dashboard. 

With PowerRadar, our advanced cloud and mobile platform, you'll receive alerts when peak days are predicted to occur. Plus, you can monitor usage and performance on desktop or mobile. This allows you to prepare to curtail usage to contribute to a lower PLC calculation.  This will help you better understand how energy consumption programs are performing and will provide the insights needed to make informed decisions to lower future capacity and transmission costs.

“With expected hotter-than-normal summer forecasts in PJM, there may be massive shifts in the energy market. Fixed Energy Plus provides customers new levels of transparency and control into exactly what they’re spending,” said John Schultz, President Centrica North American and Direct Energy Business. “We are proud to offer our customers more ways to reduce exposure to price volatility as well as offering the tools and insights they need to lower the total cost of their power.”  

Why change the traditional fixed price solution?

Energy may be one of the most important factors shaping global commerce and politics in the modern era. How much does it cost, is it available and how can we use it more responsibly?

At Direct Energy Business, our outlook is simple: an energy strategy that doesn’t consider the demand side of the equation doesn’t serve you. 

That’s why we’re rethinking our core solutions and making sure they promote cost and energy efficiency. From efficiency technologies to renewable procurement and generation, we’ve been rolling out a collection of innovative distributed energy solutions

Fixed Energy Plus is the newest part of that vision. By identifying and valuing demand reduction in an unlikely place – fixed rate procurement – we hope to help every customer achieve reliability, sustainability and efficiency.  To learn more about Fixed Energy Plus,  visit our product page and request a quote to speak to one of our experienced energy professionals. 

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Posted: March 12, 2018

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