Wherever you're from, you're bound to see different utility rates. Pennsylvania alone boasts rates that are 10% less than the national average, in part due to a plethora of competitive energy suppliers in a deregulated market.  Broadly, facility managers can choose between short-term and long-term energy procurement. So what's the difference?

Short-term energy procurement services rest on a contract that spans 3–6 months or restarts monthly.

Pros: 

• You can use short-term contracts to avoid market highs.

• If your facility is new and you don't have historical usage data, a short-term contract can help you acquire that.

• If you expect a transfer of business ownership, a short-term contract can be beneficial. Contracts typically don't transfer along with the ownership.

Cons:

• Continual contract renewal can be time consuming.

• You can easily miss out on market lows.

• Put simply, short-term contracts are much more likely to mean overpayment for actual energy usage, thus limiting potential cost savings.
  
  

Energy purchasing is best served strategically.  (What else are professional energy consultants for?) If your goal is to minimize long-term energy costs, get the best bang for your buck by:

1. Timing the market.

Because energy is a commodity, prices move in waves.  Think of the stock market — the highs and lows can be unpredictable at times, but that doesn't mean you can't find patterns to reap the greatest reward.

To minimize your overhead energy spend in the long run, you're going to need to continuously monitor these fluctuations.  Not everyone has the time for this (nor the knowhow to read the market right), which is precisely why energy procurement consultants come in handy.

2. Managing your load.

Actually changing when you use energy and how long you use it for can make all the difference.  It's like a puzzle.  Curtail your load for a few hours at a time and conserve what you saved for other times.

3. Structuring your contract right.

Not all contracts are created equal.  Because of the complex nature of commercial energy procurement, you can build your contract in different ways.  Fixed rates and structured rates are the main options, with structured rates offering a couple of setups. Let's dig into the differences...

There are a few main ways to price your commercial energy contracts:

• Fixed rates offer a set price for a specified period of time. It's a single rate per kilowatt hour that benefits companies prioritizing budget control.  It's predictable and guaranteed. Under a fixed rate contract, you're protected from market increases, but you can't take advantage of market lows.

• Index rates let businesses choose their energy timing or volume in real time (or a day in advance).  If market prices are high, you can ride it out with index rates until the pricing is stable enough for a more fixed rate.  This works great for businesses who can adjust energy usage to align with dips in pricing, but it does come with higher risk and less budget certainty.

• Blended rates are a hybrid of fixed and index rates. It's based on a combination of historical usage and future energy predictions.

In the long run, your choice for how to price energy procurement services fully depends on two things: your usage and risk tolerance.  Energy brokers can help you determine a pricing structure that benefits your company.

• You're only as good as your purchasing partner. Energy purchasing is complex by nature.  What's more is that energy rates fluctuate quickly, and you need to monitor the market consistently to make sure you're getting a fair deal. 

Of course, you have an entire commercial or industrial facility to worry about —which makes energy procurement consultants such a valuable resource.  Market comprehension, industry relationships and regulatory understanding all make up a quality purchasing partner. 

• Choose your goal: Cost-cutting or renewable energy sources? When it comes to energy purchasing, you need to determine what's most important for your facility, not what others tell you is important.  Most often, this means determining whether you give preference to cost or renewable energy procurement.

That's not to say you can't have both, but in developing a strategy that aligns with your mission, it's imperative to define your primary goal.

• Align supply and demand. An energy contract gives you your electricity or natural gas supply, so you first must determine your facility's demand flexibility.  Historical usage data is your friend here. 

If your facility is new, consider operating under a short-term energy contract until you've garnered a year's worth of data and can confidently assess your demand.

• Don't let your contract expiration creep up on you. Because of the market's fluctuations, it's smart to plan ahead and lay your options out on the table. If you wait too long, there's a high chance you'll pay too much for your next contract.

A energy broker comes especially in handy here.  When your administrators have their own set of issues to address, timely contract renewal often falls by the wayside.

Whenever you decide to renew your energy supply contract, keep these tidbits in mind:

• Monitor the energy markets frequently (or have consultants do it for you).  Energy market rates tend to fluctuate on a seasonal basis, but seasons aren't the only factors at play here.  Market events of all kinds can make rates skyrocket or pitfall, even if only for short periods.  Catching the lows can be a tedious job, but consistent monitoring really is key.

• Consider (but don't rely solely on) shoulder months.  Shoulder months are times when the temperature is nice enough to make use of outside air and reduce energy consumption.  These typically occur in the spring (March and April) and autumn (September and October).  Because of decreased demand, energy futures prices also dip.  Shoulder month contract renewal is something to consider — but it's not the only factor at play. 

A reverse energy auction is typically run by a third-party ecommerce host.  They send invitations to potential bidders, who they usually pre-qualify.  The auction itself can be as short as 15 minutes or as long as a day.  While bidding occurs, participants can see other bids, respond to them and even communicate with one another.  Electricity price is a key factor, but it's not the only one.

The pros and cons associated with using a reverse auction for electricity procurement actually go hand in hand.  While the pro is the potential to score a low cost, you can only acquire that potential by taking a risk.  As a result, the main con is the potential to pay too much.  But that's not the end of the story.

More pros: Reverse auctions can help energy buyers save money in an unbiased landscape.  It's a fairly quick process and you don't need a ton of expertise to figure it out.

More cons: The seller may not even know who the buyer is, meaning no relationship is formed.  This means you're changing power suppliers on a frequent basis.

A reverse energy auction is a gamble, no doubt — and whether or not you choose to partake all depends on your risk tolerance and budget flexibility.

Did you know that you can actually gain capital from your energy procurement strategy?  No, seriously.

Here are six ways you can bring in revenue from the grid:

1. Energy storage

With energy storage systems in place at your industrial or commercial facility, market fluctuations become an opportunity, not an adversity.  When grid rates rise, you can rely on your stored energy for consumption.  When grid rates dip, you can feel confident purchasing energy while actively working to store energy to use for future increases. 

2. Backup generators

Historically, generators have been a tool for enhanced resilience in uncertain times.  While that remains true, they're also an opportunity for strategic usage adjustment.  Upgraded generators are an intelligent response to heightened demand.  At the same time, you only have to alter your daily usage slightly — if at all. 

3. On-premise solar

In the age of renewable energy procurement, on-site solar power can be a tactical tool for reducing overall energy cost and conserving your budget.  With its renewable nature, it's also a way for you to achieve your business' sustainability goals now and in the future, making this asset a win-win for all industries.

4. Smart EV charging

Industrial and commercial businesses that rely on automotives for their operation are increasingly turning to electric vehicles.  As the industry becomes more accessible, EV charging is only developing.  You can implement smart EV chargers that continuously optimize charging times and maximum energy usage to make an EV fleet more attainable for you.

5. Strategic load management

Shifting how you think of energy can make a world of difference.  Instead of merely constituting energy as an expense, think of it as an asset that can help you reach your goals.  Actively responding to demand can not only reduce your outright costs, but it can also help you earn rewards and payments. 

6. Energy incentives

With the help of energy management consultants, you can find regional or state-led energy incentives that fit the bill.  It's not an easy map to maneuver, but one that a local expert can help you navigate.  Examples include Pennsylvania energy efficiency grants and alternative fuels incentive grants.

Throughout this comprehensive guide to industrial and commercial energy procurement, we've mentioned a few places where electricity consulting comes in handy.  But what is it that really makes outsourcing to energy procurement consultants so valuable?

• A energy broker can help you stay on top of market fluctuations, even when your focus is on running your company.

• With the help of consultants (broker, you don't have to stay ahead of the contract curve.  They'll assess the landscape for you prior to your contract expiration.

• With legislative and regulatory knowledge, you'll be able to develop revenue streams in ways you never thought possible.

• Your consultant is likely to have a firm network of industry relationships, something they can use to find the right energy supplier for you.

• Taking into account your energy goals, risk tolerance, budget flexibility and even the nuances of your unique facility, a well-versed consultant can combine these factors for holistic and individualized energy procurement strategies.

What is decentralized energy, and how can it benefit my commercial or industrial business?

Energy grids are shifting from resource-heavy power plants to decentralized systems.  Benefits include localized, renewable energy that offers a sturdier, more resilient supply.  As an added bonus, decentralized grids (or microgrids) reign supreme in blackouts or brownouts.

What value streams are available to my commercial or industrial business, and how can I participate?

To learn more about the specific value streams that are available to your commercial or industrial business in Pennsylvania, contact A1 Energy.  We'll perform an assessment of your facility and help you determine how to bring in revenue through your energy assets.

How do I know what to look for in energy procurement consultants?

Ask yourself: Do the consultants, or energy consultants, have a firm grasp of your local landscape, including suppliers, regulations and legislation?  Have they successfully worked in industrial or commercial facilities of your scope?  Are they well-versed in contract strategy, one of the primary components of a successful energy procurement process?

Want to know the truth about energy procurement services?  It's not just the amount of energy you use, but how you allocate it to be more energy efficient.  It's not just the energy price, but how you maneuver different energy contracts like a pro.  It's not just the commercial energy procurement itself, but the energy advisors you employ to work alongside you.  At day's end, this service has a lot of bits and pieces, but developing a facility-wide strategy can — and should — be done. 

For industrial and commercial facility leaders, energy procurement works best from a comprehensive perspective.  This means taking a lot into consideration, including when to renew your energy supply contract.

Energy is a commodity, so prices fluctuate.  Of course, you want to solidify a contract when prices are lower — so you can pay less for what you use. 

However, knowing when prices are down is another task in itself.  Prices tend to change quickly.  When they're down, you'll want to act fast.

If you really want to get the energy contract renewal thing right, you'll need to watch the markets.  You can learn to do this yourself, or you can enlist the help of professional consultants to do it for you.

Watching the market involves two main aspects:

• Figuring out how to read what you're seeing

• Having the time to watch it on a consistent basis

As for having the time to watch the energy market consistently, we know that's a difficult task.  Some companies choose to institute energy intelligence software (EIS) that sends alerts and notifications when there's pressing activity in the market.  This technology is customizable and allows users to set their own budget constraints.

You may have one, both or neither of these.  Whether or not you hire an energy procurement consultant is up to you — but ask yourself whether you're able to learn to watch the market and then keep your nose to the ground.  An honest answer will make a huge, positive difference for your industrial or commercial business.

You'll want to keep shoulder months in mind when figuring out when to renew your energy supply contract.

So what are shoulder months?  The shoulder month period happens twice a year, once in the spring and once in the fall.  It's when temperatures are most moderate and energy usage is the lowest.  Think March–April and September–October.

With reduced demand comes lower prices on energy futures.  This reduced volatility means it's a reliable time to consider renewing your contract.

However, shoulder months aren't the only time of the year that prices become more accessible.  There are other aspects that affect load profiles, like plant closures and openings, natural disasters, political decisions, development and regulatory shifts.

That's why it's so important to watch the market consistently.  Just know that shoulder months are a good starting point.

Learn more about energy procurement with our comprehensive guide for industrial and commercial businesses.

Are you planning to increase or decrease your load usage in the near future?  When trying to figure out when to renew your contract, knowing if you're looking at heavy or light energy estimates will make a difference in how you build the contract.  This includes when you choose to renew and whether you pick a long-term or short-term energy contract.

Pro tip: Have some forethought when it comes to your energy supply contract.

If you wait for your contract expiration to renew, you may not have the chance to swoop in on the rates you want.  Once you reach your expiration date, you'll have to get a new contract quick.  This means you can get trapped in a contract that's pricier than otherwise.

But if you're proactive about it, you can take advantage of current price drops even when your contract expiration is still on the horizon.  You can establish contract terms ahead of time.  This also gives you the opportunity to negotiate — because you don't necessarily have to say yes to the first rate that comes your way.

When you do take on the task of renewing your contract, you may want to consider reconfiguring it for increased sustainability.  Distributed generation and more can help you achieve both a low rate and low emissions — two birds with one stone.

At its core, energy procurement is a comprehensive task.  So is knowing when to renew your energy supply contract. 

Reading the market and timing it just right, estimating future usage, leaning on shoulder months, maneuvering through a pandemic that's hit the economy hard — these are all factors you'll need to take into consideration.

When it gets to be too much for someone who already runs a commercial or industrial business, energy procurement consultants serve as a helping hand.  They can help you implement all the tools necessary to time your contract right, plus help you take advantage of future price dips.

Learn more about energy procurement from A1 Energy, where solutions are holistic and optimized for the facility at hand.

Indexed-pricing strategies (sometimes referred to as spot purchasing) offer energy procurement companies the opportunity to take advantage of fluctuations in market conditions and energy pricing, unlike traditional fixed-priced strategies. 

When using an indexed-pricing energy procurement strategy, a certain percentage of a company’s gas or electric plan becomes floated on the market. Like other commodities, both of these energy costs are subject to volatility and changing market conditions on a frequent and ongoing basis. 

While the appeal of an Indexed-pricing strategy is clear, it’s also important to be aware of the potential for these strategies to run in the opposite direction, costing you much more money. If the energy markets experience a swift tick upwards and that trend maintains, you’ll be forced to settle at a much more expensive cost. 

As such, the price of your energy will fluctuate throughout the duration of your energy procurement contracts, coinciding largely with market trends that are out of your control. The risk-reward spread when using this type of strategy without the help of an energy broker is much greater than if you have an expert who can track the markets for you—while you continue operating your business. The more commonly used energy procurement strategy is fixed pricing, which we’ll explore now.

A fixed-pricing strategy (sometimes referred to as forward or firm purchasing) is the type of pricing strategy that is most common. It works exactly the way that it sounds like: At the beginning of your contract term, all of the energy that you wish to procure throughout the duration of said contract will be at a single price, determined ahead of time and unchanging. 

When using this type of strategy, there are far less variables to worry about as opposed to an indexed strategy. With the price per kWh set at the beginning of your contract, it becomes much easier to work out a strong budget. And, when you don’t have to pay as much attention to the commodity markets as a whole, it frees up more time to focus on other parts of your business. 

The downside here is that you may not get to take advantage of market lows as you buy energy. However, you can time your contract so you're locking in a solid price from the start.

Here we have another pricing strategy that does exactly what its name says. When employing blended pricing, some of the best aspects from both fixed-pricing and indexed-pricing methods are taken and repurposed to form a, well, a blended strategy. 

Part of your contract cost for every kWh of energy will be fixed at the onset of a new contract, and will remain the same throughout the duration of it. The rest of your contract is floated on the market, and its price fluctuates as such. Many companies like the versatility that a blended strategy provides them with, as it allows them to lock in a certain level of pricing, while also playing the market for a better price overall. 

When determining which strategy is right for your business, it’s important to know what your energy load profile is, and how you can improve it. 

There are certain times of the day—and times of the year as a whole—where energy is in higher demand than normal. Think summer and winter in terms of season, where the energy grid is running overtime to account for the extra usage of heating and air conditioning across the region, especially in large commercial and industrial facilities. In terms of daily usage, whether or not the sun is up usually coincides with how much energy is being used (loads tend to go up during the day and down at night).

By optimizing your load profile, you make yourself a much more attractive customer when dealing with commercial electricity suppliers. These suppliers like customers who have a high usage on a consistent basis, ideally 24 hours a day, seven days a week. If you only use energy from 9–5 (peak hours), and you use even more in the summer and winter months, your load profile will decrease in attractiveness, causing you to be charged higher prices.

One of Ferris Bueller’s all-time great ideas came at the expense of a beautiful Ferrari. If Ferris drove home backwards, all the miles that he had put on it would vanish from the car’s odometer. It's laughable, but when talking about it in the world of energy procurement, it’s not only a real thing, but it can be a great piece of solid energy procurement strategy advice. 

What we’re talking about is called net metering. In layman's terms, it’s an effective way to run back your energy meter’s reading by supplying energy back into the power grid. How? A little thing called on-site generation. 

By purchasing and installing energy-creating mechanisms (often in the form of solar panels) on their property, companies can create and store their own energy. When this energy isn’t actively being used on-location, it flows back into the grid to be distributed elsewhere. When this happens, the company that’s supplying the extra power will get credit for it on their energy bill. If done correctly, it can be a useful way to not only support the green movement, but to also earn revenue from the grid.

If this feels complex to you, you're not alone. Companies employ energy consultants on a regular basis to help them strategize as they buy energy. Reach out to A1 Energy for advice on how to strategize your energy purchasing and procurement from start to finish.

First, let’s start with the basics. What exactly is a reverse auction when it comes to energy procurement?

Well, you know how a regular auction works. The seller offers an item or service and invites bidders to make offers. If the thing being auctioned is in demand, more hopeful buyers will place bids, driving the price up. The winner is the person who is willing to pay the most for that item.

A reverse energy auction is, predictably, opposite in many ways. It’s when you, the buyer, work with an energy consultant to find the perfect supplier at the best price. Based on your past energy usage and future needs, we find a group of energy suppliers in your area who can provide what you need and invite them to the reverse auction.

On the day of the auction, the suppliers make competitive bids to earn your business for the lowest price possible. Like in a regular auction, bidders try to beat out their competition. However, with a reverse auction, the bidder who can do the job for the lowest price tends to be the winner. The suppliers in the reverse auction can’t see the name of the other bidders, but they can see the amount bid.

This all happens through an online portal so you don’t have to leave the comfort of your desk, and it usually takes less than 30 minutes.  After the reverse energy auction is complete, you get to review each supplier's bid and services to decide which one is right for you. And best of all, there’s no pressure on you to pick one of the bidders if you’re not happy with the results of the auction. It’s a win-win scenario.

Reverse auctions are a great way to save time and energy researching energy procurement, but they’re not the right solution for everybody.

Typically, these are groups that benefit from reverse auctions for energy procurement:

• Federal, state, and local government
• Industrial operations
  
• Large corporations
• Restaurants
• Hotels
• Commercial office space

It’s important that your organization be large enough for a reverse energy auction. In order for the process to work, there needs to be enough suppliers who are willing to compete for your business. However, reverse auctions can also be successful for small and medium businesses depending on the market.

No matter the size of your organization, a reverse auction for energy procurement works best when the following qualifications are met:

● A clear outline: It’s best to have specifications and clear quality standards for bidders to consider before making an offer.

● Keep it simple: Reverse auctions work well when the service being purchased is fairly simple. If you need a complicated service with multiple contingencies or complicated requirements, it might be best to work directly with suppliers.

● Competition is key: In order for a reverse auction to work and get the buyer the best price, it is necessary to have a rivalry between the companies as they need to want to compete for your business.

If you’re still on the fence about whether a reverse auction for energy procurement is right for you and your business, here’s a list of benefits and drawbacks of the process.

● Save time: If you’re in charge of energy procurement, you know that the process of finding a supplier can be time-consuming and tedious. You have to research suppliers, estimate your needs, and draw up multiple RFPs. With a reverse auction, all you have to do is consider the bids after the auction.

● Save money: one of the biggest benefits of reverse auctions is that they get you the most competitive price out there. When it comes to energy procurement, the savings usually amount to between 5 and 15%.

● Healthy market. Reverse energy auctions are also good for keeping the supply market healthy as suppliers are chosen for their price and services, not their name. In fact, most reverse auctions are anonymous so you choose the winner based on the value of their proposal, not their brand. That way you don’t have to worry about bias affecting your decision.

● Stay accountable. When it comes to a reverse auction, everything is organized, standardized, and recorded. That means you’ll have easy access to all the records you need for financial and legal purposes.

● Simplify. The best benefit of all may be how easy reverse auctions for energy procurement are. It’s a simple way to get direct comparisons between service and price without any extra effort on your part.

● Communication. Reverse auctions don't allow for much (if any) communication between the buyer and the seller before a deal is struck. So if you have complicated energy needs to discuss with a potential supplier, reverse auctions might not be right for you.

● Supplier buy in. Sometimes it’s difficult to get suppliers on-board for reverse auctions. They could be resistant to change or unwilling to sell their services for a rock-bottom price.

If you’re ready to save money, time, and headaches, then reach out to A1 Energy today. We’ll work with you to create the perfect customized energy solution for your organization. Schedule a call with one of our energy consultants now!

Facilities located in one of 13 states including Pennsylvania may know about PJM Interconnection, a regional transmission organization (RTO) that coordinates wholesale electricity.

PJM services all or some of these states:

• Delaware
• Illinois
• Indiana
• Kentucky
• Maryland
• Michigan
• New Jersey
• North Carolina
• Ohio
• Pennsylvania
  
• Tennessee
• Virginia
• West Virginia
• Washington D.C.

1. Emergency demand response
2. Economic demand response
3. On-call reserves

We'll dig more into each of these options below. For all three categories, capacity payments are based on the PJM Reliability Pricing Model (RPM), which an energy broker can help you understand.

There are other RTOs, but using PJM as a launching pad is a great way to exemplify the possibilities for revenue from the grid.

PJM requires customers to be available for emergency demand response. Mandatory compliance lasts from June 1–Sept 30 each year, which is the most pressing time for energy demand. When called upon to curtail energy, a customer receives an incentive payment.

PJM will call upon customers a maximum of 10 times per year, but the average number of times is 1–5. Facilities are notified 30 minutes in advance of curtailment, and the event lasts from 1–6 hours.

Unlike the emergency demand response program we just discussed, economic demand response through PJM is voluntary. This is a great opportunity to bring in revenue from the energy grid. Customers can only reduce their load when market energy rates exceed wholesale prices (which means the overall prices are high). An energy consultant can stay on top of things to bid for your facility a day ahead or at a moment's notice.

Compensation for economic demand response depends on the circumstances (like the customer doing the bidding and the current energy rates). PJM accepts bids that exceed the Net Benefits Test.

This is a year-round program for short notice curtailment. Bids can come in at any hour, but you have to be available for energy load reduction within 8 minutes of notification.

Usually, this type of on-call curtailment only lasts 15–30 minutes (or less). Your compensation depends on the season, time, and location. Based on the timeline, it's not for everyone—but for those who can swing it, it's a solid option for revenue.

Energy arbitrage refers to buying (or charging) energy when prices are low and selling (or discharging) energy when prices are high. 

In short, you're buying during times of low demand to get the best prices and selling during times of peak demand to incur a greater return. Timing the market is tricky, but an energy consultant can help you here as well.

Electric storage at industrial and commercial facilities helps companies weather market fluctuations. You can rely on stored energy when grid rates rise. On the contrary, dips in grid rates give you the chance to purchase energy for present and future use.

Developing a grid storage system is essential for larger operations (and even helpful for small to midsize ones). If you have on-premise solar, you can even develop your own sort of microgrid. Of course, it won't be at scale like typical microgrids—but it can help to generate power in an outage or fill in gaps during RTO-led energy curtailment. 

Energy efficiency (EE) projects differ from demand response in one key way. EE projects reduce energy usage permanently while demand response is just temporary.

However, EE projects are also eligible for RPM capacity payments. At the same time, they may make you eligible for carbon credits, depending on your state and region. You can hold onto these credits for future use or sell them to other companies who need them. In September 2020, Pennsylvania took the next step toward joining a regional cap-and-trade program called Regional Greenhouse Gas Initiative (RGGI). The move is still underway but, according to the Department of Environmental Protection, could be instituted as soon as 2022 if the vote passes.

Companies often don't realize that they have access to government incentives specifically designed to benefit the public good. For example, US federal incentives include:

• Second Generation Biofuel Plant Depreciation Deduction Allowance (which just expired on December 31, 2020 but may be retroactively extended)
• Alternative Fuel Infrastructure Tax Credit
  
• Alternative Fuel Tax Exemption
  
• Biodiesel and Ethanol Infrastructure Grants
  
• Fuel Cell Motor Vehicle Tax Credit (these and other vehicle-based incentives are relevant for companies with fleets)
  
• Improved Energy Technology Loans
  
• & more

States have unique fiscal incentives as well for alternative fuels and green energy. It's worth contacting an energy broker who knows the ins and outs at both state and federal levels and can hook you up with relevant programs.

When working with an energy broker, it's important to find someone who understands your region. This comes in handy when it's time to compare offers, renew contracts, and make the most of a shifting market.

Whether you prefer a fixed or structured energy contract, there are ways to help you offset costs through electric storage, demand response, and more. This means you won't have to work quite as hard to get where you want to go—and that's worth its weight in energy. 

All things considered, it's tricky to unearth all available revenue sources from the grid. Contact A1 Energy with any questions about ramping up revenue for your commercial or industrial business.

An energy broker—or energy consultant—helps you optimize your energy supply. They help you keep your costs low, comply with local and state regulations and reach your sustainability targets.

But that's just the start.

All the factors that go into a successful energy contract have something in common.

They take time.

This includes watching the energy markets, comparing offers from suppliers, and bridging the gap in communication. 

The U.S. Bureau of Labor Statistics tells us that the average full-time worker above the age of 25 works 8.5 hours per day (plus 5.53 hours on weekends). That's far more than full-time hours. For some, adding energy purchasing to the mix is a burden. For others, it's simply out of the question.

Energy consultants do the leg work for you. All the while, you can continue the good work you do in the commercial and industrial sectors without the burden of taking on too much. Plus, your team can focus on what they do best.

In the world of energy, demand affects prices.

In 2019, energy usage for buildings reached an all-time peak, thanks in part to more extreme weather events (the year was the second hottest on record) and growing energy demand.

Since then, demand may have shifted—but it's tricky to secure contracts before bullish price hikes. Energy consultants know how to work the system to keep energy costs low for industrial and commercial clients, who often secure energy for long periods at a time.

Due to industry knowledge and connections, brokers can secure competitive supply pricing through a strategic process. Without the knowledge and connections it is difficult to achieve the best results.

It's not just the prices that make a difference, either. There's also usage.

An energy broker knows how to estimate future load usage, so you're not signing on for more (or less) energy than you really need.

When procuring energy for your facility, one of the key steps is comparing offers from suppliers. These comparisons can get pretty complex. Having an energy broker break things down can help you easily digest the information. For example: Is the supplier response for "energy only" pricing? Is capacity and transmission treated as a straight pass through? Is gross receipts tax included?

Get an easy-to-understand comparison of offers from various suppliers, so you know what you're getting yourself into. This way, a consultant can help you reach your fiscal and usage goals. 

Plus, if you're looking to prioritize sustainability without sacrificing price, you can compare different energy products that include renewable and stored energy.

Overall, you get more flexibility in your energy suppliers.

Getting into a new energy contract means signing on to terms and conditions. T&Cs are teeming with fine print. More often than not, people miss out on important details or forget to read between the lines.

A professional has the capability to review your T&Cs to ensure they're in your best interest. No jargon can get past a good energy broker, either.

If only you could have that peace of mind for all the T&Cs you agree to in life...

Renewing your energy supply contract requires a lot, not the least of which is watching the market consistently and calculating future load usage.

The start of a new contract isn't the only time you should be managing it, either.

Oftentimes, companies fail to notice errors in their utility bills. And why would they? The bills tend to be complex, and the routine nature of payments can cause employees to overlook issues.

An energy consultant audits every bill and tackles errors on the spot before you overpay.

And one more thing: In Pennsylvania, demand response programs give organizations a chance to earn and save when they keep usage low during peak demand. A broker is the best person to hook you up with programs like this.

With an energy broker at hand, someone is auditing every bill and making sure your contract terms are in place. They're keeping an eye on your contract throughout the year, optimizing it whenever possible. As your business changes, your agreements might follow.

• Fuel prices
• Power plant costs
• Distribution systems
• Weather
• Changing policy and regulations
  

In addition, prices change by type of customer and locality. During COVID-19, electricity usage dipped by at least 20% in places with lockdown measures—yet another factor of market shifts.

An energy broker has the capacity to continuously keep their eyes on the market for the next buying opportunity. Whatever the factor at hand, they'll catch the fluctuations—and help keep your costs balanced. That's not something most facility leaders can fit into their schedule.

For energy procurement to work in your best interest, the process must be comprehensive. Whether it's you or an energy broker taking on the task, you should know the basics. 

Contact us with any questions you may have.

Supply pricing will depend on your commercial or industrial facility load profile, risk tolerance, and strategic timing of the market. The longer your run hours and the higher your load, the more critical it will be to assess your historical data and the future market forecast to make the right decision for a short or long-term contract. There are various reasons to decide on a short-term or long-term contract. Here we will help you explore some of the pros and cons for each, and highlight when it might be best to choose either.

Electric Pricing

Electric energy pricing is influenced by a multitude of interconnected factors that collectively determine the cost structure for consumers and businesses alike. Key factors include the availability and cost of fuel sources such as coal, natural gas, and renewable energies, which directly impact generation costs. Market demand-supply dynamics play a pivotal role, fluctuating based on seasonal variations, economic activity, and weather patterns. Regulatory policies and government interventions also exert significant influence, shaping pricing through mechanisms like subsidies, taxes, and emissions trading schemes. Additionally, infrastructure investments, transmission costs, and technological advancements in energy storage and distribution further contribute to pricing models. Understanding these diverse factors is essential for stakeholders in navigating the complexities of electric energy pricing and making informed decisions in energy procurement strategies.

Natural Gas Pricing

Gas energy pricing is governed by a variety of factors that collectively determine its market cost and volatility. The primary determinant is the supply and demand balance within gas markets, influenced by global production levels, geopolitical tensions affecting supply routes, and seasonal variations in consumption patterns. Pricing is also heavily impacted by the cost of extraction, processing, and transportation of natural gas, which varies based on technological advancements, regulatory requirements, and infrastructure investments. Market speculation and financial instruments such as futures contracts further influence pricing, adding layers of complexity to price discovery. Additionally, environmental regulations, geopolitical events, and weather conditions—especially during winter months—can exert sudden and profound effects on gas pricing, making it a dynamic component of energy procurement strategies for both industrial and residential consumers. Understanding these factors is crucial for stakeholders seeking to navigate the intricacies of gas energy pricing and optimize their procurement decisions.

With so many factors to consider, is strategic energy procurement for the long term or short term better? Let's look at the pros and cons.

Final Answer: Which is better for strategic energy procurement, long-term or short-term?

The choice between a long-term and short-term energy supply contract ultimately depends on the specific needs and priorities of the business. A long-term energy supply contract offers stability, predictable pricing, risk mitigation against market volatility, and potential cost savings through economies of scale, making it suitable for businesses seeking financial predictability, security of supply, and alignment with sustainability goals over an extended period. On the other hand, a short-term energy supply contract provides flexibility to capitalize on market fluctuations, adapt quickly to changing energy needs, and test different suppliers or technologies without long-term commitments. Businesses should carefully assess their energy consumption patterns, risk tolerance, budgetary constraints, and strategic objectives to determine which contract length best suits their operational requirements and overall business strategy.