Every business has to pay for energy, but not all energy bills are created equal. In deregulated markets, companies have the option to choose their energy supplier instead of defaulting to the utility rate. While the utility is still responsible for delivering the energy, the supply portion of the bill can be purchased competitively. For large energy users, this choice can have significant financial impact.
While switching away from the utility rate may sound complicated, the process is typically simple and requires little operational effort from the customer. In many cases, businesses see no change in how their energy is delivered or billed, only in how the supply portion of the energy is purchased.
What Does the Process of Switching Entail?
If there is one benefit of paying the utility rate, it’s that there is no extra effort involved. Switching to a third party energy supplier contract can sound like a complicated process, however, when done properly it will be a seamless transition that can offer benefits that make the change worth your time.
It will probably look something like this:
Customers can contract directly with a supplier, but many choose to work with an energy broker who helps compare supplier offers, negotiate pricing and guide the overall strategy. Brokers also help facilitate the contracting process, making the transition away from the utility rate straightforward and giving customers peace of mind.
Most customers will see no operational change after switching to a third party supplier as certain billing types, like UCB, mean that customers will still only receive one bill from the utility. The only thing that will change will be the rate that you’re paying, which in many cases will be lower.
Unmanaged Energy is a Missed Financial Opportunity
The biggest risk of staying on the utility rate isn’t just price, it’s lack of strategy. Although deregulation is not a new concept, the energy market has become increasingly volatile over the past few years making it essential for deregulation to be on any large energy user’s radar.
With the right strategy, customers can take control of their energy spend and gain clarity into an unpredictable market. With most large energy users taking advantage of this strategic opportunity, business owners who opt to stay on the utility rate risk overpaying for energy and overspending compared to their competitors.
In deregulated states, staying on the utility rate can mean exposing your energy bill to inflated prices and can make budgeting difficult. Switching to a third party energy supplier offers an opportunity to navigate the increasingly volatile market, instead of accepting high prices and overestimating annual budgets to accommodate.
Volatility is not expected to slow as grid strain and severe weather continues to impact the energy market. While unpredictability can be daunting, it is a great opportunity to reevaluate how you manage your energy to capture market opportunity and protect your bottom line.
The Value of Managing Energy Beyond The Contract
In addition to gaining control over energy spend and managing risk related to market volatility, many large energy users find value in actively managing their energy portfolio over time. Depending on the partner they work with, companies may also receive support with monitoring contract performance, tracking market conditions and addressing billing or utility issues that arise throughout the year. This type of oversight helps ensure that energy contracts continue to perform as expected while minimizing internal workload.
Some organizations also benefit from energy budgeting support, which uses current market data and forecasts to help predict future energy costs more accurately. For finance teams and property managers, this can make planning and cost control significantly easier.
For many companies, having experienced professionals handle these tasks allows energy procurement to remain largely hands-off internally while still benefiting from a more proactive strategy. For companies looking to take a more strategic approach to energy purchasing, working with experienced advisors can help simplify the process and uncover opportunities that might otherwise be missed.