If you are considering shopping for a retail energy contract or energy plan in a deregulated state, then you should be aware of the top energy-buying mistakes made by businesses like yours. Avoiding these energy-buying pitfalls can help to save you time, headaches, and money in more ways than one. In this article, we will cover the top mistakes made related to the following energy contract categories:
- Types Of Energy Rates
- Energy Contract Language
- Avoiding Energy Scams
- Using (or Not Using) An Energy Broker
Types Of Energy Rates
First, it’s important to know that there are many different types of energy plans available for commercial and industrial businesses. In fact, since energy usage varies depending on the type of business, finding an energy rate that suits your individual needs can save you lots of money in the long run. Here are some of the pitfalls to avoid.
Most commercial customers simply elect to enroll in a fixed-rate energy plan without fully understanding the components of a fixed rate. In order to offer a fully-bundled fixed-rate plan, retail energy suppliers usually add extra risk margin into the rate in order to protect themselves from energy market fluctuations. Furthermore, even if your business uses power during less expensive, off-peak periods, you might be obligated to pay a premium for your fixed energy rate that can be much higher than if you had a custom-tailored plan.
What To Know:
The best course of action is to have an energy broker or consultant evaluate your business’s energy usage patterns to determine the best-fit energy plan. In some cases, a hybrid energy product that is a blend of fixed and index energy rates could save you more money than a standard fixed energy plan.
Energy Contract Language
Next, the details of your energy supply contract matter more than you know. Do not be fooled into thinking that all energy contracts are standardized. There are important differences and details that can make or break the way you are billed in the future. Here’s what you need to know.
Many customers are not educated or aware of certain energy contract clauses that affect their rates. Contract language such as energy bandwidth clauses or material contract changes can drastically change how energy suppliers charge you for energy. In these examples, using more or less energy than what the supplier projects for your business could result in additional costs. Other important terms of the contract include dual vs. consolidated billing, early termination penalties or fees, and what happens if you cancel your contract early, move business premises, sell your business, or go out of business.
What To Know:
In order to ensure that your energy contract is not too one-sided, it’s always recommended to have legal counsel review the terms on your behalf. Some other tips include negotiating more favorable bandwidth or swing agreements, understanding how early termination fees are calculated, and defining the specific events that trigger a material breach of your energy contract.
Energy Fraud And Scams
It is paramount to be aware of the common energy scams, fraud, and problems with energy suppliers that are prevalent in the deregulated energy industry. These scams affect businesses across the country and can be quite costly when not caught early enough. There are, however, several steps you can take to correct problems and avoid energy fraud.
Some of the more common energy scams include slamming or when suppliers switch your energy account to their service without your consent, being billed very high variable energy rates, unauthorized energy pass-through charges, and auto-renewal contract terms. These practices are common in the energy industry and should be avoided. Here are some things you can do to mitigate any risks.
What To Know:
In order to prevent your account from being slammed, you can request that a block be placed on your utility account(s) with the local utility company. If you want to avoid high variable charges, be sure to renew your energy contract on time and understand the exact date of expiration. To be protected from unwanted pass-through charges or contract auto-renewals, be sure to read the terms of your agreement carefully before signing. You may even want to consider hiring an energy broker to negotiate with energy suppliers on your behalf.