If you are in a deregulated state (click here for map of deregulated states) and consume an above average volume of energy, you HAVE BEEN CALLED by either a third party supplier or broker. In fact, you have probably been called MANY TIMES, maybe even by us! That is because deregulation has opened up a new industry geared at helping consumers understand the complexity of the market and make the right decisions. This is similar to how mutual funds opened up a new market for financial advisers, and health insurance complexities opened up a new market for insurance specialists. So, the real question is - Do I need to use a broker, or can I do this myself with a little research?

Step One - Understanding Energy Rates

Are you looking at your gas or electric bill wondering if you are getting the best rate? Your bill contains so many different charges and fees that it's hard to really tell what you are paying. For most people, it would take a lot of time and research to be able to determine what those charges represent. A broker can review your energy bills for you (usually at no charge) and quickly inform you what all is contained in your bill. An experienced broker may even find erroneous issues on your bill that could be costing you money!

Step Two - Lowering your Energy Bill

The question still remains - Is this the best rate I can get? Here enters the broker. In most cases, we find that we can lower your energy bill by at least a few percentage points, with the possibility for even more significant savings as well! However, savings opportunities vary by location and there have been several instances where we determined that the rate a client is paying is already the lowest it can be.

Step Three - Shopping for Rates

It takes a considerable amount of time and effort to know the market and be able to coordinate pricing requests among several suppliers at exactly the right time when market indicators are in your favor. The keys to successful purchasing of energy contracts are time to market, identify alternative routes to market and properly present your consumption data. Do you have that kind of time? Herein lies the real benefit of a broker. An energy broker can relieve that burden and will work on your behalf with a number of suppliers to identify the best rates and terms available. A good broker will understand time to market, will have the necessary tools to request quotes from third party suppliers on a timely basis, will be able to review the rates and terms of the energy contracts and have the industry experience to identify the best options for their clients.

Step Four - Market Monitoring

The relationship between the broker and the client should not end right after the contract has been signed. A good broker should remain in communication with the client on an as-needed basis to keep them informed of any market changes that might affect them. Energy is a very volatile market, which is subject to constant changes and fluctuations throughout the day.

Step Five - Contract Management

Most business energy contracts require the customer to terminate towards the end of the agreed period - up to 90 days, but usually no less than 28 days, depending on which supplier you are with. If you forget to terminate the contract you could be rolled-over onto new contract rates for a period of some years, or put onto what the suppliers call 'deemed rates' which are only tied in to a 30 day contract, but are usually at least double the standard rates you were paying before!

How to Detect a Good Broker

I've mentioned "good broker" a lot throughout this blog. So, how can you tell a good broker from a bad one (and they are out there)? A good broker should be more like an energy manager for your company. They should be asking you a lot of questions regarding your operation and your tolerance for risk. You should also be asking them some questions as well. Here are the top three questions you should ask the broker:

1. What rates can you offer me? - A good broker SHOULD NOT answer this question! The market is far too volatile and rates are based on market conditions at the time the price is quoted. Prices offered one day or hour may greatly differ from the next, and are also based on your unique consumption data and risk. So, a good broker would first ask for a copy of your invoice, then can determine what pricing will be offered to you.
   
   
2. Are you independent? - Unfortunately, many "brokers" out there actually work on behalf of a third party supplier! With that scenario, you lose out on the competition driving down the price, which is the whole purpose of deregulation! You should make certain the broker is in fact a broker, and not just a supplier's salesman in disguise.
   
   
3. How long have you been in business and are you licensed? - As I stated, deregulation has opened up a new industry with very little cost to entry, resulting in a lot of new brokers in the market. Many of these new businesses may not even really understand the energy market that well. They simply become a middleman with little or no value. Check out their website to see if it contains any details on market conditions. Make sure you work with a trustworthy broker who knows the industry and will be around for the long haul!

Summary

If you feel that you understand all of the complex components your energy bills, you constantly monitor the market and watch for economic factors that may affect market pricing, you have the time to request bids from multiple suppliers the instant the market changes in your favor, and you have the energy contract knowledge to make certain your contract meets your needs and covers you from losses - then you might not need an Energy Broker. Everyone else - call Jim Baldauf at 816-883-1014.