What can an energy broker provide to its commercial clients?
Electricity and natural gas rates are difficult to pin down and are subject to an array of market forces. This makes it tough for businesses to stay on top of their energy expenditures, and that means a lot of companies are wasting money on power. This is especially true in deregulated markets, where energy suppliers must compete on price to retain customers.
Energy brokers help their commercial and residential clients avoid this by acting as an expert intermediary between the supplier and consumer. This allows businesses to focus on operations, instead of dedicating resources to optimizing energy expenditures.
Three reasons why partnering with an energy broker makes sense for businesses
Making the right energy supplier decision and signing the right contract may save your company thousands of dollars per year. The challenge, though, is knowing who to buy power from and how to organize a favorable contract. Energy brokers are skilled in both areas, and they can provide a few major advantages to their commercial clients, including:
1. Better leverage
In deregulated markets, electric and gas providers have to compete for customers, and that means leverage is an important consideration. Because they represent many consumers, brokers approach energy suppliers with more leverage than any one business or homeowners has.
Further, energy suppliers know that when they are dealing with a broker, they are dealing with a potential client who is shopping around. Otherwise, why would the business hire the broker in the first place? If a supplier knows that your business is evaluating multiple providers, they will be more likely to compete a bit harder to win you over.
More leverage means more competition, which means a better price.
2. Hard-to-find expertise
In Texas, there are dozens of power suppliers, and each one may offer several contract options to their commercial clients. Businesses have hundreds of electrical and gas “products” to choose from, and without an expert on hand, making the right choice can be tough.
Energy brokers are familiar with the suppliers that operate in their market. In fact, experienced brokers often have a list of preferred suppliers they work with, so they can narrow down your company’s choices right away to the best options on the table.
In addition to their in-depth supplier knowledge, energy brokers know the differences between fixed and flexible contracts, as well as concepts like block pricing, variable pricing, off-peak and peak pricing, and more. An energy broker may also be familiar with green energy and the many forms it can take.
That is complicated enough, but it gets even more complex. Suppliers differ in their definition of fixed pricing and variable rates, and that difference in contract language could mean a big difference in actual price. Energy brokers are experts at reading energy contracts, so they can catch a seemingly innocent clause that has a big impact on the plan’s cost.
3. A long-range vision
Energy brokers have to operate with perfect timing, as the electricity and gas markets move constantly. Entering the market at the right moment could spell big savings for your business, but a reputable energy broker is more than a market opportunist.
Ideally, your broker will bring a long-term, strategic vision to your company’s energy procurement. What does that mean? It means assessing your company’s current electricity and gas consumption, compiling usage data, and using this data to locate the best possible contracts for your company. It also means forecasting your company’s energy needs into the future, so that the contract your business chooses works now and later. A reputable broker should be able to show you the numbers, comparing current costs with expected future costs, so this strategic vision is built on data.
If your company operates out of multiple locations, an experienced broker can arrange contracts for additional sites. If credit is a concern, an energy broker can assist with that as well. Need a special pricing arrangement for your operations? A broker can negotiate on your behalf and, if there are issues with billing after the contract is signed, a broker can also help resolve that.
An energy broker does much more than observe and operate in the market. They are more like a procurement partner, capable of providing ongoing value.
When working with an energy broker, what does the process look like?
Data collection and research are essential prior to signing a new energy contract, so the process is important when working with a broker.
Here is what that process typically looks like:
Initial consultation and needs analysis
Energy brokers perform many roles for their clients, and at first, they act like a consultant, evaluating your company’s current and future energy needs. During this initial consultation, the broker will analyze usage data to determine the best way to approach the energy market.
Communication with suppliers and acquiring contract options
Energy brokers know their clients have more things to worry about than energy procurement, so the broker will communicate with suppliers on their behalf. With the client’s usage data in hand, the broker will survey suppliers to find a few competitive contract offers.
Contract information presentation
Reading contracts is another time consuming part of the process, but an energy broker knows what relevant details to bring to their client. Once viable offers are on the table, the broker will assess each one and present them, pointing out expected savings and any other contract details that could affect pricing.
Choosing a contract and signing it
The energy broker and their client will work together to choose the best contract fit and then sign it. If there are credit requirements to fulfill, the broker can help their clients meet them.
Once their client has transitioned to the new contract, an energy broker can still act in a support role, by monitoring energy usage and billing. This ensures the contract’s terms are being upheld on the provider’s end, and if there are any discrepancies, the broker will work to resolve them.
Businesses rely on consultants and experts to make cost effective decisions, and it’s no different with energy procurement. With the right contract, your business can make the most of its resources, and an energy broker will ensure that your company finds that opportunity.