Buying Energy? Look Under the Hood.

Unfortunately, buying energy is not a straight-forward purchase. The energy industry and deregulated markets are multi-faceted; suppliers, policies, rules and regulations vary by state and region.

Whether you are sourcing energy prices directly from a supplier or from an energy advisor or broker, it’s critically important to approach the process with your eyes open when reviewing energy prices, the components feeding into those prices, and the supply contract terms and conditions tied to them.

Transparency

When you get an energy price from a supplier or broker, there can be widely different levels of transparency. Energy prices may be presented to you;

  • Without detail on how specific price components (energy, capacity, renewable charges, fees for locking, etc.) are being treated leaving you with an incomplete understanding of price risk
  • Without supply contract terms (like swing provisions, change-in-law language, material change clauses, etc.) that would let you know how suppliers could adjust your energy deal based on your usage or regulatory actions
  • Without location specificity (basis exposure, city gate versus burner tip) which makes it hard to know if you are comparing apples to apples

How are you receiving price offers from suppliers?

To be sure there are no hidden costs or fees, and no unforeseen cost increases down the road, you should be sure you are receiving detailed energy bids. Usource clients receive a ‘bid summary sheet’ displaying bid detail that came through our competitive bidding platform, broken out by supplier. The bid summary sheet is then reviewed via conference call or in-person meeting to determine next steps in the contracting process. No bid is withheld, no costs are hidden.

The Importance of knowledge and experience

The energy industry is complex and ever-evolving. Policies, regulations, programs and incentives continue to change. Usource will walk you through the different aspects of each price offer to make sure you understand the contract and associated risks.

If you’re not sure your supplier or broker has been fully transparent during your energy procurement process, contact a Usource advisor today for a second opinion review of your energy contracts and strategy.


About the Author

Tom Dyer is Sr. Director, Procurement & Analysis for Usource. Tom has over 16 years of experience in the energy markets, including working for two of the largest energy suppliers on the East Coast.

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