Commercial Energy

How can an energy broker help MUD districts with their costs?

Municipal Utilities Districts (MUDs) are responsible for delivering various services to local homeowners, acting somewhat like a small governing body. MUDs are primarily empowered to offer water and wastewater services, though the scope of these district’s powers have expanded with time.

Still, water and wastewater provisioning are the major costs associated with running a MUD, and that cost is paid for in the form of property taxes from local homeowners. Water plants require electricity to function, mostly to operate pumping systems, turbines and backup generators. Minimizing this cost minimizes MUD taxes, which can be a big draw for people looking for an affordable property.

An energy broker can help MUDs do just that, by locating and negotiating a favorable power contract with a local power supplier.

Why should MUD districts consider working with an experienced energy broker?

An energy broker’s mission is to help their clients secure favorable pricing on electricity and to lock in that pricing through a long-term contract. The question is, why do residential and commercial clients need an energy broker to manage that? There are a few reasons, including:

1. An energy broker has the time and expertise to analyze contract offers

Energy contracts, like most contracts, aren’t easy to read and understand if you don’t have the proper expertise. Getting the best possible deal, though, means reading through multiple contract offers from multiple suppliers. In fact, a single supplier can make several contract offers that vary in real pricing over the contract’s life.

If a MUD doesn’t have someone ready to analyze the contract language, it’s highly unlikely that the district will pick the right contract. That could cost the MUD, and property owners by extension, thousands of dollars every year.

Energy brokers perform several roles for their clients, but one of the most important is reading through contracts, analyzing their pricing structure and presenting them to clients in a way that’s easily understood. Ideally, a broker will compare contracts by their expected savings, reducing the decision to a couple of simple points. What isn’t simple, though, is reducing contracts to simple language, because they frequently contain clauses that could greatly alter power costs, depending on how they are interpreted. It is up to the broker to clear this language up, so there is no ambiguity involved.

Delegating this job to a broker ensures it is done correctly and promptly, so it’s a role that pays for itself.

2. An energy broker can take future power needs into account

With time, property owners expect their MUD taxes to decline, mostly as a result of the MUD being built out and no longer needing the same level of funding. MUDs can help speed this process along by securing a favorable long-term contract.

A reputable energy broker, then, will not sacrifice future savings for a better short-term deal. Instead, they consider what the MUD’s power needs will be years from now, so expected usage can be considered when securing a contract. In fact, assessing the client’s usage patterns is a part of the process, as brokers will use this to quantify the MUD’s expected savings with each contract.

Energy brokers can also help MUDs find particular energy products, such as renewables, if desired. This can be used to advertise green initiatives to potential homebuyers, helping attract additional taxpayers.

3. An energy broker has a lot of leverage in negotiation

Energy brokers represent many clients at any one time, and suppliers recognize this. They know they aren’t striking a deal with a single client, but with someone who has access to many clients, including clients who own multi-family properties. This gives energy brokers a leverage advantage, and they can use it to negotiate better rates for their clients.

Further, because energy brokers’ primary mission is to secure a favorable contract, suppliers know they must provide competitive offers, or risk losing out on a potential customer. This is another bit of leverage that energy brokers can use to get their clients the best possible deal.

How can MUDs pick the right broker for their needs?

The key to finding the right energy contract is finding the right energy broker, and in this industry, results are what matter. There isn’t much formal education that goes into being a broker, and there aren’t industry associations to help keep an eye on the field. That means you’ll need to consider the broker’s skills, which means looking at the following:

The broker’s client history

The best predictor of future success is past success, so before bringing on an energy broker, review their client history. Ideally, the broker will provide contact information to any references, so you can follow up with them and ask about their experience with the broker.

This is important for clients representing MUDs, corporate housing or apartment complexes, because contracts between suppliers and these clients usually run longer.

The broker’s supplier network

It is also essential that the broker you choose has a developed supplier network to draw from as well. Energy brokers usually have a handful of suppliers they like to work with, due to a positive negotiation history. However, the more suppliers in your broker’s network, the more leverage they will have, the more contract offers they’ll be able to pick up, and the better the deal you’ll end up with.

The broker’s ability to communicate

Communication is at the heart of everything an energy broker does, so they must be good at it. When your broker is contacting suppliers for a contract, communication is key. When they negotiate particular terms or rates with a supplier, communication is key. When they present these terms to the client, communication is key. If your energy broker knows how to use their personality and professionalism in conversation, they will represent your interests well.

Homeowners expect their MUDs to secure reasonable energy deals to help mitigate property taxes. An energy broker can assist MUDs in this mission, using their leverage, communication abilities, and industry knowledge to secure a favorable rate that property owners can be happy with.