Managing Energy Expenses
By: Tom Majka, Senior Utility Analyst - Business-Right Energy Brokerage
You probably already know that there are significant savings of 20%-60% to be captured by reviewing your electricity and natural gas rates. You may also be wondering where you’re going to find the time, expertise, and funds to take advantage of the opportunity.
The recent changes in the energy market provide a financial instrument allowing you to purchase electricity and gas from the supplier with the best rate, while the underlying utility that actually generates and delivers it remains the same.
Take advantage of the free expertise of a broker.
A good broker has the ability to solicit bids from all the key suppliers, format them into a user friendly spreadsheet and make recommendations based on your company’s needs.
Best of all, they’ll provide all this information with little to no effort or expense on your part. Typically, all they’ll need are copies of your recent electricity and natural gas bills.
With this information, the broker can provide a spreadsheet analyzing your past energy expenses and contrast them to the best rates currently available. Since electricity is down about 24% on average and natural gas as much as 60%, this can quickly add up to very significant numbers.
Consider your goals when selecting your term.
Evaluate terms of 12, 24, and 36 months. The 12-month term will offer the very best rate, thus offering the greatest savings. It’s the path that most businesses choose. A 24- or 36-month term can offer longer guaranteed pricing, allowing you to set your longer term budgets and protect your business from rate increases.
Identify your payment options.
Many electricity and natural gas providers will allow you to pay by credit card or EFT at no additional charge. This has multiple benefits including putting extra cash or rewards in your pocket. Consider that if your combined monthly utility bills are $10,000 and your credit card issues you 5% back in cash or rewards. That would add up to an additional $6,000 annually, no small figure; and one less bill to write a check for each month.
Paying by credit card or EFT will also improve the ability to get credit approval for companies with limited credit history or imperfect credit. Of course, paying by check is always an option.
Don’t overpay sales tax.
Businesses such as restaurants, non-profits, and manufacturers are frequently paying sales tax on utilities. Consult with your energy broker or tax advisor to ensure you aren’t throwing money out the door. If you have been overpaying, look into your recovery options which allow you to pursue up to four years of payments.
Get your quote.
This is the most important part. It takes two minutes to email a scanned bill. Let the broker do their job and provide the analysis. If the savings justify action, then you’re ten minutes away from being done. If the savings don’t justify movement, then you have the peace of mind knowing that you’re properly positioned. Every dollar saved equates to three dollars earned, so be sure to review once each year.
About the Author: