Energy Matrix Pricing.
What is Matrix Pricing?
In the retail energy sector, energy suppliers rely heavily on energy brokers for commercial customer acquisition. In fact, today the majority of commercial energy supply transactions are executed through an energy broker. In order to streamline pricing operations for brokers, most retail energy suppliers publish matrix pricing that allows brokers to obtain price quotes immediately. Matrix rates are a list of prices offered by a supplier that can be sold directly to customers without having to contact the supplier for a price quote. Here are some of the things you need to know about matrix rates:
- most suppliers publish matrix pricing daily
- matrix pricing goes up and down with the price of the energy market
- matrix pricing is typically sorted by several factors including utility, kWh usage, rate class, start date, contract term
- suppliers sometimes put certain requirements on matrix deals (size, load factor rating, customer type)
- energy brokers like Diversegy offer tools to sort through hundreds of matrix files instantaneously
The Pro’s and Con’s of Matrix Pricing
Matrix pricing has many benefits but can also have its downsides. When considering whether you should use a matrix rate or custom price for your customer, there are several factors to consider. Let’s start with the upside:
Pro’s
- Easy to use and scalable
- Great way to predict custom price trends
- No need to contact suppliers for quotes
- Great for accounts with poor load factors
- Great for small commercial customers
Con’s
- Can be higher than a custom rate
- Not all customers qualify
- Limited customization
- Standard contract terms – no special language
- Not great for larger customers
