What mistakes do businesses make when shopping around for electricity?
Too often, business owners start looking around and then accept the first lower price instead of looking at all their options. It is not difficult for any vendor to present a savings of 5 to 10 percent to a client. But if you are patient and thoughtful about the process, there are additional savings available, with average savings of 10 to 20 percent.
Even if the savings are just tenths or hundredths of a cent per kilowatt hour, if you are using 100 million kilowatts a year, that can add up to a savings of tens of thousands of dollars.
Also, too many companies are unwilling to look beyond their current supplier when seeking a lower price. No matter where you are in Ohio, your current supplier will take the first shot at providing better pricing for you. After that conversation, it is often difficult for a company to pass up that offer and reach out to the rest of the supplier community.
It is well worth the extra week or two to make that effort, particularly if you have someone who can very quickly get multiple pricing options for you.
What do you see as the future of the market?
It is chaotic right now because of pricing fluctuations and all of the new players in the market, and I do not see it getting anything but more chaotic over the next few years as there are more aggressive renewable portfolio standards, which require a certain amount of power consumed in Ohio to come from a renewable source.
In addition, there is the potential for carbon trading to become part of the mix. If the U.S. passes an energy bill that contains a cap-and-trade system for carbon, it will become more difficult for companies that are in a high-emissions business to expand, because they will need to provide some type of offset for the increased emissions that expansion would entail.
It is important for businesses to stay up on what is going on in Washington because if a cap-and-trade bill is passed, it will be a game changer for a lot of businesses.
Mike Wise is the co-chair of the Energy Practice Group at McDonald Hopkins LLC. Reach him at [email protected] or (216) 430-2034.