Each month, you pay your electric bill, but do you really understand what you are paying for? And do you know that your current electricity supplier is not your only choice?
By exploring your options and making informed choices, you can save your company a considerable amount of money, says Mike Wise, co-chair of the Energy Practice Group at McDonald Hopkins LLC.
“Because Ohio has a deregulated electricity environment now, almost invariably you can get a much cheaper price for your electricity by going out and shopping for it, rather than just accepting whatever electricity pricing is provided by your current utility,” says Wise.
Smart Business spoke with Wise about how to get the most for your money when buying electricity and how to find the best supplier to meet your needs.
How can a business owner get started saving money on electricity?
The market really opened up in June 2009, and although the major consumers of electricity are aware of the opportunities, smaller and mid-sized companies are just beginning to realize those opportunities.
The first thing to do is to look at your electric bill and understand how much electricity you use. Your bill will also tell you what you are paying per kilowatt hour for your electricity. If you want to go through the process internally, start with the Public Utilities Commission of Ohio Web site to start looking at pricing from other suppliers, or your general counsel can help shepherd you through the process. In relatively short order, you should be able to get a sense of what you are leaving on the table.
Alternatively, you can get outside help. An outside adviser can use an electronic request for proposal process, which is very transparent and forces the generators to provide their absolute best pricing. An adviser will profile your company’s electricity use. Based on that profile, an electronic RFP is created and posted online, so that electricity generators that are serving Ohio are able to bid on it. The process takes about 10 to 14 days start to finish.
An adviser is a great resource for companies that do not want to take the time to do it themselves or that do not feel like they have the aptitude to get their arms around the process.
But whether you address alternative electricity procurement on your own or with the help of an adviser, the important thing is to address it, because even the smallest company can benefit from shopping around.
How often should you review your usage and pricing?
Generally a business will contract with a generator for six months to two years, although there are variable pricing players that will price month-to-month. However, most business owners want more predictability than month-to-month pricing provides.
Reviewing your electricity usage and pricing is definitely something you should do periodically as your current contract nears its expiration. Prices fluctuate daily and can fluctuate dramatically from week to week, so it can be difficult to know when to make the move. An adviser can help you look at historic trends and identify long-term opportunities that can help you make that decision.
You want to try to take advantage of the market, but you also don’t want to go through the effort of doing this every month.
And even after you have locked down a price with a contract, you should make it a habit each quarter of looking at both your gas and electricity usage and pricing to make sure that you are taking advantage of all the opportunities that are available.