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FAQ: What are my energy bill format choices?

By AJ Brockman

When you sign a contract with a third-party supplier, your energy bill can come in one of three formats:

  1. Single Supplier Bill
  2. Utility Consolidated Bill
  3. Dual Bill

Let’s see what each of these billing formats looks like.

Single Supplier Bill

The name of this billing type varies by supplier, but the basic format is the same for all. Under this billing option, all your charges — supply, market, delivery (utility), and taxes — appear on one bill from your supplier.

Energy Bill Format: Single Supplier

Single Supplier Bill

To pay this bill, send your payment to the supplier. The supplier will then remit the utility portion to your local utility.

Utility Consolidated Bill

With this billing type, all charges — supply, market, delivery (utility), and taxes — are on one bill issued by your local utility.

Energy Bill Format: Utility Consolidated

Utility Consolidated Bill

Make your payment directly to the utility, and the utility will pay your supplier its share.

Dual Bill

This billing option is exactly what it sounds like. Each month, you’ll receive two invoices — one from your supplier with your supply charges, and one from your local utility with its charges. Market charges will appear on either the supplier’s bill or the utility’s bill.

 

Energy Bill Format: Dual Bill

Dual Bill – Supplier Portion

Energy Bill Format: Dual Bill

Dual Bill – Utility Portion

 

With dual billing, make sure you pay both invoices each month.

Can I choose my energy bill format?

Sometimes. Your ability to choose your billing type depends on:

  • The state you live in
  • The commodity (electric or gas)
  • The supplier

Some suppliers give you the option to choose your billing type for both commodities. Others have a set billing option that you can’t change. If you prefer one billing type over the others, make sure your chosen supplier can provide it.

Is one billing option better than the others?

The short answer is no. There are no premiums associated with any of these 3 billing types.

Some clients prefer one bill from either the supplier or their local utility that includes all charges because they only have to keep track of one invoice each month. However, we recommend choosing the billing type you’re most comfortable with.

A quick note: When switching suppliers, it’s a good idea to keep your current billing type. This helps avoid billing delays and other billing issues.

Have more energy bill questions?

Check out this video about your energy bill components. And feel free to comment below or reach out to us with your questions.

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Two-Minute Tuesday: On-Bill Financing

November 26, 2019

Video Transcript

So you’ve decided to do an energy efficiency project. Now, how are you going to pay for it? In today’s Two-Minute Tuesday, we’re going to review on-bill financing as a way to pay for your energy efficiency project.

What is On-Bill Financing?

Under on-bill financing, your energy supplier will pay for the cost of your efficiency project. You will sign a supply agreement with that supplier for some defined period that will include a monthly fee that the supplier will use to help pay back the cost of the efficiency project.

Here’s an example of how this works:

Company A is currently spending $50,000 per month on electricity, using 1,000 MWh at $50/MWh.

Current State

Company A negotiates a 3-year agreement to fund a lighting efficiency project. Once the efficiency project is completed, the energy usage reduces 10% to 900 MWh. This customer pays a monthly financing fee of $5,000 on their invoice. As you can see, their monthly spend on electricity stays at $50,000 during the term of the agreement.

During Project

Once the 3 years are up, the financing fee is eliminated from their bill, and the customer’s monthly electricity spend is reduced by 10%.

After Project

Benefits

So what are the advantages of on-bill financing? Well, most on-bill financing programs are considered “off balance sheet,” so getting internal company approval for these types of programs is often easier than for traditional funding.

Secondly, many clients declare the monthly fee on their bill as an operating expense since it is included on your monthly energy invoice. So there may be some tax advantages* to capitalize on from this financing.

Consider on-bill financing for your energy efficiency project.

In short, supplier on-bill financing for efficiency projects is another way to pay for your energy efficiency project. There are many advantages of this option that aren’t provided by other forms of funding.

Thank you for watching our video, and be sure to catch December’s Ask An Advisor video in which we showcase a client who used on-bill financing to fund their lighting efficiency project.

**DISCLAIMER**

Nania Energy Advisors is not a licensed tax professional, and this article does not constitute tax advice. Tax exemption benefits are unique to each business. Any action you take to manage your exemption status after reading this should be verified with a licensed tax professional before implementation. Nania Energy Advisors assumes no liability.

 

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Pros & Cons of a Partial Fixed Product

By Calvin Cornish, CEM

November 25, 2019 – If you’ve seen our recent Risk Management video, you know that a Fixed All-In product isn’t your only purchasing option for your electricity.

The chart below shows you the 5 components that make up your electricity supply charges.

Components of Electric Cost

Anytime you lock less than all these components, you have chosen a Partial Fixed (also called Pass-Through) product. Any component not included in your fixed rate is “passed through” to you at its actual cost each month.

Clients typically pass through capacity and transmission (yellow and light blue above) because they’re the next largest costs behind energy and are not directly related to your monthly usage.

Why would you choose a Pass-Through Product?

The pros and cons of a partial fixed product mostly center around risk and its effect on price.

Pass-Through Product: PROS

  1. Reduced risk. Including capacity and transmission as part of your fixed rate converts those flat demand charges ($/day) into usage-based charges ($/kWh). As a result, you could end up paying higher costs for your demand charges.
  2. Avoid risk premiums. If you fix your cap and trans components, suppliers include a risk premium as part of your rate to protect themselves from underpayment. These risk premiums increase your monthly cost.
  3. Take advantage of improved efficiency. If you undergo an efficiency project that improves your load profile, you could lower your capacity and transmission charges. You won’t see that decrease if you’ve fixed them as part of your rate.

Pass-Through Product: CONS

  1. Uncertainty around PLC tags. A large factor in your demand charges is your facility’s usage during the grid’s peak usage periods. There is always a risk that a couple of bad days can result in higher numbers.
  2. Demand charges could increase. By not including capacity and transmission in your rate, you run the risk of these costs actually increasing if your efficiency declines. The type of facility matters — residential and commercial buildings are less likely to see decreased efficiency than industrial manufacturers.
  3. Billing complexity. Passing through components adds line items to your bill. A single cost per kWh will always be a cleaner billing option.

Who’s a good fit for a pass-through product?

If you identify with any of the qualifiers below, you could benefit from a pass-through product:

  • Clients looking for budget accuracy and have a low risk tolerance
  • Anyone with plans to improve efficiency in the next 1-2 years
  • Clients with annual usage that varies notably and has a higher chance of decreasing than increasing
  • Anyone involved in a buying group
    • You want to limit the socialization of demand charges. Otherwise, you could end up paying for the costs of less-efficient buildings.

What should you expect when passing through components?

  • The costs for any passed-through components will vary throughout the term of your contract.
  • On you electric bill, you’ll see the published tariffed rates for your pass-through pieces.
  • You won’t have any hedging premiums on your passed-through components.

Is a partial fixed product right for you?

The list of qualifiers above is by no means exhaustive. The real answer is unique to you based on your risk level, usage profile, and the nature of your business.

If you’d like to learn more, take our Risk Tolerance Survey or contact us to be paired with an energy advisor.

 

Learn about other electricity products:

About the Author

Calvin is a Certified Energy Manager and has served as a Senior Strategic Energy Advisor at Nania Energy since 2010. He specializes in preparing property management boards to make informed decisions on energy efficiency through proper industry education. His clients include apartment complexes, condominium associations, and senior living facilities. In his free time, Calvin enjoys music and coaching youth sports.

Calvin can be reached at (630) 225-4554 or ccornish@naniaenergy.com.

 

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What is a Fixed All-In Product?

Video Transcript

Hi! I’m Mike, and I’m a Senior Energy Advisor here at Nania Energy. Whether you’re new to energy buying or you’ve been buying for quite a while, you’ve probably heard of a “Fully Fixed” or “Fixed All-In” product.

In today’s video, we’re going to do a deep dive into what a fixed product is, the pros and cons of choosing a fixed product, and why it’s such a common choice among energy buyers.

What is a Fixed All-In Product?

Your energy supply charges are made up of five pieces of the pie shown here.

  • Energy by far is the biggest. These charges are at least 50% of the pie. Energy Components Chart
  • Next is Capacity. Capacity relates directly to when you use energy and how you use energy during peak times over the course of a year.
  • Next is Transmission. Transmission are the charges of the energy going across the wires from the grid to the place where the power is being used.
  • Up next is Losses. Losses is a small portion of your bill, but that’s related to the loss of energy over the wires that the utility gets to recoup charges for.
  • Lastly is Ancillaries. Ancillaries make up a small portion, just like losses. Those are miscellaneous charges — anywhere between 30 and 50 different charges — that are put into a catch-all bucket.

So, with a Fully-Fixed product, we’re locking all 5 pieces* of the pie into one rate.

*Note: Depending on the market, all or some of these components may apply. For example, in Texas capacity/reliability costs are included in the energy component rather than separately charged for.

Pros & Cons of a Fixed All-In Product

Now that you understand the components of the energy pieces that go into the pie, we’re going to talk about the pros and the cons of a Fully-Fixed Product.

Pros

  1. You have the same rate regardless of usage. Your rate won’t change based on seasonality or any major variations in your monthly usage.
  2. It makes budgeting easy and predictable. You estimate your annual usage, you times it by the rate, and you get your budget for the year. There’s no worrying about variable month-to-month charges when estimating what your budget might be.
  3. You can take advantage of the market. As we’ve seen historic lows over these last couple of years, locking in a longer term — say, 24, 36, 48, or even longer — can yield tremendous savings and protection over the long term.

Cons

  1. You have little to no flexibility. Say your facility gets more efficient and your capacity numbers improve. You’re locked in at an artificially higher rate than you would be if you were able to take advantage of those efficiency improvements in the facility.
  2. There are built-in premiums. While you have budget certainty by locking all the pieces of the energy pie, there are premiums built into each of those pieces that suppliers use to hedge their risks. So while you have premiums attached to each of those, you’re paying a little bit of a higher rate than you would with another product.
  3. Is now the right time to lock? While this could be viewed as a pro — similar to market timing — I get asked a lot “What if I lock and then the market goes down?” I usually ask in response “Would it bother you more if the price went down another 1-2 percent or if it went up 5-10 percent?” It’s about market timing and what you’re most comfortable with at that time.

Why is Fixed All-In a popular product choice?

So why is Fixed All-In such a common choice for new energy buyers?

  • It’s easy to understand. You have one fixed rate on your bill and you’re good to go.
  • There’s no guesswork. When it comes to your budget, you have the ultimate budget certainty.
  • You have an apples-to-apples comparison when you’re shopping with other suppliers.

Should you choose a Fixed All-In product?

Is a Fixed All-In product the best choice for you? Or is there another product that might fit better with your strategy and your facility?

Contact an advisor and we can have a conversation about your electricity purchasing options.

Thank you for watching!

Learn About Other Electricity Product Options:

Index Product

Pass-Through Product

Two-Minute Tuesday: What is a CEM?

Video Transcript

Hi! I’m Calvin, and I’m a Certified Energy Manager (CEM) as designated by the Association of Energy Engineers (AEE). What is a Certified Energy Manager? Well, that’s what we’re talking about in this week’s edition of Two-Minute Tuesday.

What is a CEM?

The AEE describes a Certified Energy Manager as someone who optimizes the performance of a building, facility, or industrial plant.

What does that mean, and why is it important to you?

Picture the offensive coordinator of a football team. He develops the game plan to guide the activities of skilled experts.

The Certified Energy Manager is a team leader. He helps companies develop a game plan for managing their energy.

CEMs are tested for knowledge on areas such as:

  • Fuel supply pricing
  • Energy economics
  • Mechanical systems, like HVAC and boilers

They need to know energy auditing information in order to evaluate projects on the front end and to do measurement and verification on the back end.

Do you need a CEM at your company?

For many organizations, a full-time energy manager with advanced degrees and certifications just isn’t realistic. So they look to consultants or advisors to help them put together a plan.

If you’re in the market for a company to help with your energy plan, make sure you look for one that has Certified Energy Managers on staff. They’ll bring a level of knowledge and expertise that will help your plan be successful for the long term.

Thanks for watching, and if you have any questions or comments, please contact us or leave them below.

FAQ: Why Do You Need an LOA or LOE?

By AJ Brockman

When you ask a Nania Energy rep to price your account, they’ll ask you for three things:

  1. A copy of your most recent energy bill,
  2. Your current contract end date, and
  3. To sign a Letter of Exclusivity (LOE) or Letter of Authorization (LOA)

In this post, we’ll cover the basics of LOEs and LOAs — what’s the difference, why we need them, and how they impact the pricing process.

What’s the difference between an LOE and an LOA?

An LOE gives a broker exclusive access to pricing from a supplier. It’s an industry standard, and it signals to the supplier that you only want them to send pricing to whoever submitted the LOE.

An LOA is not exclusive — a supplier will send pricing to anyone who submits an LOA on your behalf.

When it comes to signing authorization documents, there are a few rules of thumb:

  1. Identify your intent. If you only intend to work with 1 broker or consultant, sign an LOE. If you opt for an LOA, only sign one with brokers or consultants you’re currently working with or are strongly considering working with. Having too many authorization documents floating around can cause confusion for suppliers and you and slow down the pricing process. 
  2. Read through the document. There’s no industry standard when it comes to the language of an LOE/LOA. If the document contains the word “exclusive,” then you’re looking at an LOE.
  3. Look for term length. The LOE/LOA should clearly state how long it’s valid for.

See our LOE here:  Nania Energy Advisors – LOE

See our LOA here: Nania Energy Advisors LOA – Non-Exclusive

If I sign an authorization letter with you, can I still get pricing from my current broker?

It depends on which form you sign.

If you sign an LOA with us and your current broker, it’s possible that we will both receive pricing from the supplier. However, there most likely will not be a significant difference between the rates.

If you sign an LOE, the supplier will only send pricing to whoever submitted the LOE. An LOE trumps an LOA.

Side note: If a Nania Energy rep asks you to sign an LOE, they will let you know ahead of time which suppliers they’ll be submitting it to.

How long is an LOE/LOA good for?

Each company has its own LOA or LOE, and the restrictions and limitations vary for each.

Our LOA is good for 12 months. The term length for supplier-specific LOAs are typically between 6 and 12 months.

Does an LOE/LOA allow you to sign contracts for me?

NO. However, the form does allow us to sign utility usage request forms on your behalf.

A usage request form facilitiates the transfer of information from the utility to the supplier for pricing. Each supplier has their own utility-specific usage request form. We fill them out for you to keep the pricing process moving — and we’re not constantly pestering you for your signature.

Takeaway: Know what document you’re signing.

When an advisor or broker sends you an authorization letter to sign, look it over carefully to see whether they’ve sent you an LOE or an LOA. Knowing the difference between the two can speed the pricing process along significantly.

If you’re not sure which document you’re looking at, feel free to send it to us and we’ll be happy to help you identify it. And if you have further questions about LOEs and LOAs, comment below or contact us for more info.

FAQ: How Can I Spot an Energy Scam?

By AJ Brockman

In 2018, there were 63,626 reported cases of utility fraud in the US.

Can you imagine what that number would be if everyone reported every single energy scam they experienced?

Unfortunately, energy scammers typically target residential users. But even though you’re a commercial or industrial energy consumer, you’re not immune to scam attempts.

Here are two common energy scam attempts you may have experienced (or, sadly, might at some point):

Scam #1: Phone Call/Email from a Fake Energy Company

When someone calls you saying your power or gas is going to be shut off unless you pay ASAP, your heart races and your brain goes 100 miles per hour. “Did I forget to pay my bill??”

Chances are: No, you didn’t.

But these scammers operate on fear and knee-jerk reactions, which are powerful responses.

Luckily, there are a few ways you can spot this type of scam. Keep an eye/ear out for:

1) “Your service will be shut off immediately…”

That’s never the case with utilities or third-party suppliers.  If you’re behind on payments, they’ll send you an initial notice that contains your overdue balance.

If you’ve missed so many payments that your account could actually be disconnected, your utility or supplier will send you a formal Notice of Disconnection (typically mailed to your facility) that includes an estimated shut off date and time.

2) “…unless you submit payment in the form of gift cards/prepaid debit cards/money wire/PayPal/Venmo.”

These aren’t standard payment methods for utilities or suppliers.

3) Vague details about your “contract.”

A scammer will most likely say something close to “when your contract expires in a few months.” If they’re calling from your current supplier or broker, they should be able to tell you your exact contract end date (ex. November 30, 2019). If they can’t give you specifics, don’t trust them.

If you’re supplied by your local utility, you don’t have a contract in place. Therefore, it’s a scam.

Scam #2: Slamming

Slamming is when someone claiming to work for an energy company switches you to a different supplier or signs you up for third-party supply without your consent.

It’s not as common for C&I customers as the phone and email scams. But it’s been happening so frequently in the residential space that some states — including Maryland and Illinois — are cracking down on shady suppliers.

Do brokers and consultants slam?

If they have good business practices, no.

Although brokers and consultants can help you switch suppliers, they’ll never sign a contract on your behalf. And they won’t put you with third-party supply without your knowledge.

They’ll usually ask you to sign a Letter of Authorization (LOA), which allows them to receive pricing and usage information for your account. But this doesn’t give them permission to sign contracts for you.

How To Protect Yourself From Scammers

1) Know your account status.

  • If you’re currently under contract with a third-party supplier, who are you with? When does your contract expire?
  • Are you up to date on your payments?

2) Check the URL of the email address or do a reverse phone lookup.

  • A quick Internet search of the URL (after the “@” in an email address) should pull up the company’s website if it’s legitimate.
  • If people have received spam attempts from number in question, you’ll most likely find it reported online.

3) Ask about an LOA.

  • Brokers and consultants should ask you to sign one, and in some states it’s a requirement.
  • But look over the LOA’s language carefully to confirm it doesn’t allow them to sign contracts on your behalf.

4) If you’re still not sure, check with your broker/consultant/supplier/utility.

  • They’ll tell you if the call or email came from them.
  • And if it didn’t, they’ll help you report it.

It can be scary (not to mention annoying) to receive an energy scam call, and these days they’re harder to identify. Keep these warning signs and tips in mind the next time you receive a call from an unknown number.

Ask An Advisor: What Is Your Risk Tolerance?

 

Video Transcription

Hi! I’m Mike, and I’m a Senior Energy Advisor here at Nania Energy Advisors. One question we get asked all the time is: “How do I go about choosing the right energy product?”

In today’s video, we’re going to discuss one of the first factors to consider when choosing an energy product. And that is: Risk Tolerance.

4 Levels of Risk

When it comes to choosing an energy product, it’s not “one size fits all.” Fixed all-in isn’t always the best choice for everyone.

Each product type comes with its own level of risk. On our website, you can take a survey which will determine your organization’s energy risk tolerance. Based on those results, you’ll be classified into one of four risk tolerance levels:

  • Low
  • Mild
  • Moderate, or
  • High.

Low

So let’s talk about each level. The first is Low. If your organization has a low risk tolerance, we recommend a fixed all-in product. And here’s why:

  1. You probably have to adhere to a pretty strict budget. You want to have a pretty good idea of what your monthly energy spend is.
  2.  Having the same fixed rate makes budgeting and accounting easy from month to month, with little or no involvement from you.
  3. You can set it and go. You choose a rate, and you can rest easy knowing that there won’t be a big change in your rate despite a change in usage.

So, if you have a low risk tolerance level, look for a fixed all-in product.

Mild

The next level is Mild. For customers with a mild risk tolerance level, we recommend a managed product.

If you have a mild tolerance for risk:

  1. You can afford to go 10% over budget without major consequences.
  2. If you enroll in a managed product through a supplier, they’ll lock different portions of your usage every month until 100% of that volume is locked. They use market opportunities and logic in order to determine how much to lock and when.
  3. It’s another set it and go option. You don’t need to be involved in the process.

So, if you have a mild tolerance level for risk, consider a managed product.

Moderate

The third level is Moderate. If you have a moderate risk tolerance level, then a layered product might be a good fit for you.

Moderate risk tolerance means:

  1. You’re not a budget-driven organization.
  2. A layered product is different from a managed product by involvement level. With a managed product, the supplier makes all the purchasing decisions for you. With a layered product, you need to be actively involved in the buying process so you can decide when to lock.
  3. And, you need to actively monitor the market to decide when the best opportunities are.

So, if you have a moderate risk tolerance and the time to devote to the energy buying process, look into a layered energy product.

High

Our last risk tolerance level is High. An index product is a good option for you if you have a high risk tolerance level.

You most likely:

  1. Have little to no budget
  2. And you’re comfortable with market fluctuations. You can survive the extreme upticks of the market.
  3. Although an index product does not require you to lock, you should remain alert and be ready to act should an opportunity present itself in the market.

So, if you have a high risk tolerance, an index product might be a good fit for you.

Other Factors to Consider

Risk tolerance isn’t the only factor you need to consider when choosing an energy product. Other factors to consider are:

  • How much is your annual spend on energy?
  • Do you have any energy efficiency projects planned?
  • And how much time do you want to devote to monitoring the market?

Use this video and our survey as a guide, but please consult with an advisor or broker for a more detail conversation on choosing an energy product. Keep an eye out for a future video when we dive deeper into the 4 types of energy products.

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Pros & Cons of an Index Product

By Michael DeCaluwe

Occasionally I will get asked about what is a better energy solution — fixing energy or selecting an index product.

Answering that question involves both understanding what an index product is and knowing your specific energy needs and risk tolerance.

What is an index product?

On an index product, your energy rate fluctuates with the market and varies month to month. Your monthly electric rate is based on an hourly rate published your regional electric grid operator.

The utility’s meter takes hourly reads of the amount of power consumed,  and the hourly quantities are charged at the grid operator’s hourly rate. This is your indexed power rate.

Index power rates are typically low at night and during the spring and fall. Rates are higher during “peak” usage hours (8AM-5PM) and during summer and winter when energy demand is at its highest (for heating and cooling needs). Your electric invoice is the total of all these hourly costs for the month.

Are you a good fit for an index product?

An index product is a good choice if you can tolerate volatility or if energy makes up a small portion of your operating costs. Over time, index energy costs have historically been lower than fixed costs because there are no supplier risk premiums built in.

You could also benefit from an index product if you can shift your load to off-peak times. You could take advantage of the lower off-peak hourly rates.

Lastly, if you have a pending energy efficiency project or load management upgrade, consider choosing an index product until the project is completed. Then, you can lock the lower rate that could result from the project.

What’s the difference between being on an index product with a supplier and being with the utility?

If you’re not under contract with a third-party supplier, then you are receiving your electricity directly from the utility. Some utilities offer an hourly index supply rate.

However, there are several differences between the utility’s index product and a supplier’s:

  • A supplier’s index rate (Day-Ahead) can be less volatile than the utility’s (Real-Time) based on the types of indices they use. In some hours, this difference can be as high as 20%.
  • The utility could be socializing non-energy costs, which would increase your index rate.
  • The utility must accept all customers into its programs, while a supplier has credit thresholds.
    • In some markets, customers on utility supply may end up paying for receivables from uncollected supply costs.
  • If a company ever wanted to fix a portion of their future load, the process would be easier if they were already on an index product with a supplier.

If none of these issues are a concern, then the utility could be a good option for you.

Is there more or less risk with an index product?

Although an index product for power has historically been less expensive than a fixed product, it is not risk-free.

For example, during the polar vortex in January and February of 2014, utility index rates were as high as 4-5 times the average price of energy for these months.

Can you take the risk of having your energy costs be 30-40% over budget? Most energy buyers say they can’t take that risk, which is why they typically select a fixed product.

Also, an index product doesn’t give you the ability to budget for energy expenses. For budget-conscious organizations, an index product is not a good choice.

Index at your own risk.

Index energy solutions can be a good fit for some energy consumers. However, you need to know both the benefits and the risks that come with them. The decision to select an index product should be part of a long-term strategy rather than a short-term gamble to save on energy costs.

Please comment below with your questions and thoughts, and feel free to contact me directly if you’d like to hear more.

 

About the Author

Michael is the Senior VP of Commercial & Industrial Sales at Nania Energy Advisors, where he as worked since 2007.       He believes that listening to and understanding clients’ energy needs is vital to becoming a thought leader in the industry and forming a mutually beneficial business relationship. In his spare time, Michael enjoys being a dad, staying active, and playing basketball.

Michael can be reached via email at mdecaluwe@naniaenergy.com or via phone at (630) 225-4552. Click here to follow him on LinkedIn.

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FAQ: Are Energy Brokers Crooks?

By AJ Brockman

Some C&I energy purchasers are wary of working with energy brokers because they’ve been burned in the past.

Prospects have expressed these fears about working with a broker:

  • “Brokers favor some suppliers over others and don’t give you ‘true’ numbers.”
  • “They don’t give you a true apples-to-apples comparison.”
  • “Brokers aren’t transparent about their costs.”
  • “They’ll make you terminate your current agreement early and leave you with thousands of dollars in early term fees.”
  • “Brokers double-dip. They’re getting paid by the supplier and still charging you a direct fee.”

Unfortunately, energy brokers are getting a bad rap due to a few bad apples. And as a result, some energy purchasers are choosing to use their local utility as their supplier.

However, not working with an energy broker could cause you to miss out on the benefits of a deregulated energy market.

“I had a terrible experience with a broker after we reviewed their rate vs. the utility. How do I know another broker won’t do the same?”

Here are a few signs that you’re working with a “good” broker:

1) They’re completely transparent with you.

Your broker should answer questions such as “How are you paid?” and “What are your costs?” without batting an eye.

2) They give you honest, straightforward pricing results.

The components included in an energy product vary by supplier.

For example: Supplier A’s “Energy Only” product could include Energy and Capacity charges. Supplier B’s “Energy Only” product could have Energy, Capacity, and Ancillaries included.

Your broker should communicate these differences to you and give you a supplier comparison that’s as apples-to-apples as possible.

Similarly, they should tell you the pros and cons of each supplier and recommend the supplier that best fits your needs — even if they don’t have the lowest rate.

3) They don’t tell you to terminate your current agreement before it expires.

A good broker will NEVER advise you to terminate your energy agreement early — even if today’s market is lower than your current rate.

Early termination fees can be detrimental to your budget and difficult to reconcile.

Your broker should only give you pricing that’s effective after your current agreement’s expiration date. And they’ll ensure that your switch to a new contract is clean and has no additional fees.

Good brokers are out there.

Don’t let one bad broker experience keep you from working with someone new. It’s important that your broker meets your energy needs and works with vetted suppliers that do the same.

Use our Advisor/Broker/Consultant Evaluation Checklist to determine if your current broker is right for you.