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5 Common Myths about Energy Choice

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If you don’t know the truth about your choices, making energy decisions for your business can feel complicated. Or worse – confusion about energy can make some business owners opt out of making a choice at all, leaving them paying a high default rate for power or natural gas. But the truth is, if you’re in an open energy market, you can choose your energy supplier. Just like many other expenses, from your internet provider to partnering vendors, energy is a business expense that you can manage by selecting a plan, price and term that meet your needs.

Read on to discover some of the biggest myths about energy choice and learn how you can choose an energy supplier that matches the needs of your organization.


I have to buy energy from the utility company.


If your business is in an open energy market, you can choose your energy supplier.


Deregulated states offer constituents the opportunity to choose where they buy energy: the local utility company or an independent energy supplier. Both sell electricity or natural gas, which is delivered to your business through the electric lines and gas pipes that are already connected to your building. In most markets, the utility company also maintains that energy delivery infrastructure.

So, what’s the case for shopping around?

Think of buying energy like buying an airline ticket. There are numerous ways to buy plane tickets, and you don’t have to purchase them directly from the airline you’re flying with. In fact, you may save money or gain perks by purchasing your ticket through a third party. For example, you can buy an airline ticket directly from Delta or United, or you can purchase the same ticket through Priceline, Expedia or even your credit card rewards platform. No matter where you shop, you’re considering prices for the same seat on the same flight; but by shopping around, you may get a lower price, different purchase terms, (such as cancellation fees or insurance) or even the opportunity to earn rewards or get a discount on a bundled hotel or car rental.

Similarly, by shopping around for your organization’s energy, you can secure a lower price, better contract terms, rewards or bundled rates for electricity and natural gas.


The utility company is the most reputable source for energy.


All generators and suppliers buy and sell energy in the same marketplace.


There are many different parties that buy, sell and trade energy. But all of them, from utility providers to power generators to independent suppliers, participate in the same regulated energy marketplace. Any energy supplier can theoretically buy commodity from any other generator. So, licensed energy suppliers can access the same sources as your local utility. Each supplier manages relationships with generators, choosing when and how much to buy, sell and trade, usually with the goal of getting the lowest price. Utility companies are required to follow a precise “recipe” for creating consumer prices. Conversely, competitive energy suppliers can often be nimbler, adapting the “recipe,” to create different plans and prices. While utilities and competitive suppliers use different tactics to get low prices for consumers, both source energy from the same reputable generators.


If I leave the energy utility, my power or gas service won’t be reliable.


Choosing a competitive supplier doesn’t affect reliability or response times during outages.


No matter where you buy energy, it’s the utility’s job to maintain the wires and pipes that deliver power or gas to your business. Businesses that buy directly from their utility do not receive better, faster, or preferred service than those who buy through third parties.

Recall the analogy of buying a plane ticket: the airline itself is responsible for airline infrastructure. Likewise, the utility company manages grid operations for all consumers, no matter where you buy energy.


My energy utility company is a nonprofit, and produces a public good.


Your local utility is privately owned and may factor profit margins into your rate.


If you’ve ever owned or landed on the Electric Company space in the board game, Monopoly, you know that utilities can be great money makers. The same thing is true for many energy utilities across the United States. Even if utility service is the “default” option, utility companies usually have shareholders that hold them accountable for making a profit and delivering returns. For example, Dominion Energy, a Virginia utility, reported a $2.29 billion operating profit from Virginian energy consumers for the 2017 fiscal year.


Competitive energy suppliers are a scam.


Competitive energy suppliers are credible market participants that can benefit your business.


Competitive energy suppliers are certified by your state’s public utility commission to operate and are held accountable to regulations regarding switching service, pricing, contracts, and more. If any energy supplier fails to stay within the confines of the law, the company may be forced to pay large fines or even be prohibited from operating. Competitive energy suppliers have the same government certifications as your utility and are incentivized to create benefits for consumers.

As a business owner, you likely get mail, phone calls and door-to-door sales people claiming you can get a lower energy rate. It can be difficult to identify which offers are as grandiose as they claim to be, and it’s important to watch for signs of fraud. You can take a few simple steps to verify legitimate offers and protect your business from energy scams. You should never provide personal or payment information to an unverified caller and end the conversation if you feel pressured or uncomfortable. Be familiar with your energy billing cycle and call the phone number listed on your invoice or contract to ensure you’re speaking with a trusted representative. Remember, only your utility can disconnect service, and notice of disconnection is always completed in writing with a specific deadline.

Are you shopping for an energy supplier for your business? Check out our tips for what to consider when choosing an energy supplier.

Discover 5 essential keys to choosing an energy supplier

Posted: August 08, 2019