Posted by SJI Energy Advisors on Jul 8, 2020 3:00:00 PM
There are more than 2,200 energy brokers in the Mid-Atlantic Region, with varying levels of expertise and experience. So how do you identify the best one for you? Consider these eight questions to help you decide.
- Are they licensed? All brokers should be licensed by the Public Utility Commission to operate in your utility area. If not, they are either operating illegally or working through a third-party with a license, which simply adds another layer of expense.
- What is their bidding process? Reverse auctions, where multiple different suppliers compete head-to-head for your business are hands down the best way in finding the lowest price for you. If they are not conducting reverse auctions, eliminate them immediately.
- How do they develop the Request for Pricing (RFP)? Expect your broker to understand your energy strategy and goals fully, and to craft an RFP that explains all your requirements to the suppliers clearly – e.g., multiple term lengths, bandwidth, green-power; and pass-through of Capacity and Transmission charges, and the terms for buying/selling overage/underage.
- How many suppliers do they work with? A capable broker should have a network of at least 30-50 suppliers. New suppliers entering the market often bid aggressively to capture market share, so your broker should keep abreast of new entrants.
- Is this a good time to buy? Of all the factors that affect energy pricing, the most important is timing. A good broker should have the knowledge and experience to understand the factors that drive the market. For example, current electricity prices are holding at 5-year lows and the “Futures” pricing curves are highly favorable. If your broker has not alerted you to this, you are missing a historic buying opportunity.
- What is their contracting process? This step is often overlooked but is critical. Every supplier has a different contract and process for booking. An experienced broker can help you avoid contracting pitfalls and regulatory landmines.
- Do they value your time? Once the bids are in, you should be presented with every bid on every contract variable, followed by a concise summary of your best options. You should spend no more than 2-3 hours on this entire process.
- What ongoing support do they provide? To ensure that you are being billed correctly from both the supplier and utility, bill audits must be conducted throughout the term of the contract, with your broker taking charge if an issue emerges. Also, seeing that your broker or consultant has access to data, you should be able to lean on them for any needed support. Lastly, see if they offer energy efficiency programs, Demand Response or energy management and monitoring hardware and software. Reducing your energy consumption is as important as buying it at the lowest possible cost!