In many states, local utility is no longer the only game in town when your business buys electricity or natural gas supply. In restructured markets, customers can choose to shop for a competitive energy supplier instead, to find the best deal and service for their needs—and that can mean big benefits for small businesses. The local utility still maintains the grid reliability, including the poles and wires, and still handles outage repairs and meter readings. State law mandates that all customers must be treated the same regardless of their choice of energy suppliers.
To start comparing your energy options, head to your state's public utility commission website and search for nearby suppliers based on ZIP code. Using your state's site will ensure that the company you're researching has been licensed to supply energy in that state.
With that in mind, here are five important things to consider when shopping for an electricity or natural gas supplier.
1. Determine what’s most important to your business.
Having a choice means finding the right supplier to fit your individual needs, whether it’s a better rate, customer incentives and discounts, or innovative products and services to help manage your energy use. Businesses should also consider the value of locking in a rate for an extended period. Many choose long-term price-protected agreements, which protect a business’s budget from potential variable rate uncertainty.
Consider the factors that can affect your experience, including the supplier’s reputation for reliable customer service. How long have they been in business? Do they have the size and scale to help you manage risk? Throughout your energy contract, you’ll want to find a supplier that is easy to do business with and will handle transactions seamlessly (including switching and renewing contracts).
2. Find out if the supplier is registered with the local regulatory commission.
Competitive energy suppliers must be registered with a regulating body, such as the Public Utilities Commission (PUC) or Public Service Commission (PSC), and obtain a license that allows them to enter into contracts with customers in a particular market. Suppliers who offer electricity and natural gas must have separate licenses for each. Make sure any company you research is licensed in your state.
3. Understand fixed versus variable rates.
Knowing that your electricity or natural gas price will remain fixed during the contract term selected can allow you to focus on your business instead of worrying about potential market changes. When choosing a long-term rate, make sure the supplier will be there to honor the rate over the life of the contract. Always weigh the value of a strong, experienced, and well-established brand when making your decision.
4. Look for clear, straightforward communication.
Ideally, you want a supplier that offers transparency in billing and usage information and will help you understand the terms and conditions of your agreement. Small businesses need to make sure they understand all pricing components, including whether or not additional charges will apply due to credit worthiness, pass-through charges, and changes in laws or rules.
5. Remember, the lowest price isn’t always the best value.
Price is not always a good predictor of long-term costs. It might sound counter intuitive, but looking at price alone may not always yield the lowest overall cost to a consumer over time. For instance, a low introductory rate over a short term could appear attractive, but you could end up paying more over time compared to a longer term fixed rate.