Retail energy supplier contracts are complex and can be confusing to novice energy brokers, and it is imperative that you understand the terms of all supplier contracts before recommending them to your customers. If you put a customer with an energy supplier that has adverse terms, you could be putting your customer and your reputation at risk. Here are some of the common clauses energy brokers miss in supplier contracts:
Some suppliers have auto-renewal clauses in their contracts that can be harmful to your customers. For example, the clause might read that if the customer does not cancel the contract by a certain date, then it will auto-renew at the then market price.
Your customers can end up paying a much higher price for the renewal period than what you can obtain from another supplier.
Knowing what suppliers have auto-renewal clauses is critical to being an apt energy advisor. Furthermore, if you have enough business with a particular supplier, you may even be able to negotiate the removal of such clause.
Another more recent clause found in many matrix contracts is the pass-through. This clause allows suppliers to charge customers for any additional costs they may incur over the duration of a fixed-rate contract. For example, should transmission or capacity costs increase, the supplier reserves the right to have the customer pay the difference. However, suppliers do not typically credit customers should these costs decrease.
It may not be possible to eliminate these terms from a supply agreement, but it is important to know what suppliers’ contracts contain them and how to present them to your customers.
Lastly, many suppliers offer prices that are contingent to a certain swing or usage bandwidth. In other words, the price they offer is only valid for a certain amount of kWh (+/- a specific %). If your customer uses more or less than the allotted bandwidth, then the supplier reserves the right to charge them to market rate for that energy.
Customers who signed fixed rate agreements are not happy to realize that the supplier is charging them a different price for this usage variance. However, there are some advantages to utilizing bandwidth clauses to secure lower rates. It is important to understand this concept and be able to discuss it with your customer.
Learn more about energy bandwidth clauses here.