Every business needs electricity to function. But most business owners rarely give it a second thought, going to work each day and flipping a switch, taking it for granted that the lights will come on.
But businesses have more at stake than just the lights coming on. Without electricity, computers won’t work, equipment and machinery won’t run and your IT infrastructure will be unable to operate. And why would you want to leave all of that to chance, when there are reliable, affordable options to choose from?
All electricity suppliers are not equal. By taking the time to do your research and finding a supplier that not only delivers electricity but acts as a partner to your business, you can reap benefits far beyond what you could by simply choosing the lowest-cost provider, says L. Gene Alessandrini, senior vice president of marketing at PPL EnergyPlus.
“Electricity is critical to businesses, yet many fail to do their homework and find a supplier that best meets their needs,” says Alessandrini.
Smart Business spoke with Alessandrini about what businesses should look for in a competitive electricity supplier, how finding the right partner can help your business move forward and why going with the lowest-cost supplier isn’t always the best idea.
What should businesses look for in a competitive electricity supplier?
Many business leaders see price as the driving force behind the selection of a competitive electricity supplier. And while price is certainly important to a business, there are other factors to carefully consider and research before you commit to a contract on something as important to your business as electricity supply.
First and foremost, choosing an electricity supplier should be a partnership. An electricity supplier should be more than a commodity supplier. Your business runs on electricity, and it can’t run without it, so you should expect a trusted voice with an established reputation to partner with you to meet your needs.
Right now, electricity prices are as low as they have been in several years, but they won’t stay that way forever. A trusted electricity supplier that takes a partnership approach will help your business understand market trends, minimize the impact of price volatility, educate your business on best practices for smart energy usage and provide a consultative approach.
You want an electricity supplier who stays connected to your business’s current and future energy needs, not one that just takes a one-size-fits-all approach to supplying power.
Why shouldn’t a lower price be enough to make a business switch suppliers?
Wholesale electricity prices are lower than they have been in several years due to the increased availability of natural gas and reduced electricity use as a result of the slow economy. Good deals abound in the current market, so many competitive suppliers are offering prices that could reduce your electricity costs.
Keep in mind, however, that price should never be the only factor when a business is choosing a competitive electricity supplier. A conscientious electricity supplier will offer a combination of competitive pricing with customizable products and services, and an understanding of both your business needs and energy market performance that help businesses for the long run.
An electricity supplier with extensive experience will help your business navigate through volatile market trends and identify ways that it can help your business become more energy efficient or that you can potentially earn revenue from your energy use. An electricity supplier that also offers related energy services to help businesses with mechanical needs or renewable energy needs also can help make a long-term difference beyond price.
The bottom line is that price is one factor, but it’s important to consider the benefits that result from having an industry expert on your side with additional products and services that create greater value.
Why is experience an important factor when a business is selecting a competitive electricity supplier?
An electricity supplier with extensive experience and industry knowledge, one that takes a dedicated and thoughtful approach to your business, is a valuable asset to have on your side. For example, if you are a business with multiple facilities, you should be looking for a strategic partner that understands complex transactions across multiple locations. Also, many companies today are looking to make their business greener. If that is the case, you should be looking for a strategic partner that can offer renewable energy solutions and energy efficiency services.
Many competitive electricity suppliers are able to offer a low price but not all of them have the industry experience to effectively negotiate the market with an understanding of your particular business energy needs. A knowledgeable electricity supplier forms a dedicated relationship to understand your business and how it uses energy and when its peak demands are, then applies that knowledge to help you meet your bottom line.
An electricity supplier that takes a comprehensive approach to your energy usage needs is part of the partnership that goes beyond the initial sale, resulting in a smarter use of electricity that could ultimately benefit your bottom line.
L. Gene Alessandrini is senior vice president of marketing at PPL EnergyPlus. Reach him at email@example.com or (610) 774-4483.
Competitive energy markets give business leaders an opportunity to choose a supplier, negotiate rates for electricity and natural gas, and customize a suite of innovative products and services to meet their needs. But nearly 38 percent of industrial and 67 percent of commercial companies still haven’t cashed in on the state’s open energy market because they’re still relying on old buying habits, says Robert D. Gabbard, president of PPL EnergyPlus.
“I firmly believe that an open marketplace creates efficiencies and is superior to a vertically integrated monopoly, because prices have been trending lower since 2008 and the early adopters have been able to reduce their company’s overall energy costs by 5 percent to 10 percent and, in some cases, even more,” says Gabbard.
Smart Business spoke with Gabbard about how businesses can capitalize on Pennsylvania’s open energy market by forming new buying habits.
What major changes have taken place in the Pennsylvania energy market in the last five years?
The creation of an open, competitive energy market in Pennsylvania has spawned industry consolidation and several mergers in recent years. On the one hand, consolidation is advantageous because only the most efficient and financially sound suppliers survive and savvy executives have seized the opportunity to garner additional savings by leveraging their purchasing power.
On the other hand, executives must use due diligence to select a financially sound supplier and choose products and services that support their business model. For example, if your company has implemented a green initiative, select a supplier that offers energy from renewable sources.
Or, if your goal is to drive revenue by signing new customers to long-term agreements, it makes sense to reduce price volatility by negotiating a long-term energy contract.
The bottom line is that there’s no need to settle, as business leaders have the opportunity to select a supplier and a suite of products and services that fit their company’s needs.
What is the most important thing businesses in Pennsylvania should know about the competitive energy market?
Pennsylvania is no longer operating under a monopolistic structure, but you don’t have to take a lot of risk or sign a long-term contract to garner lower rates and better service. Start by making small changes that create new buying habits, such as researching suppliers, requesting quotes and then signing a simple, short-term contract. Once you’re comfortable with your supplier and the bidding process, you’re ready to source additional savings by utilizing demand-side management programs or shifting daily production schedules to capitalize on lower energy rates throughout the day.
You don’t have to predict your future energy needs to receive a low rate, because there are programs for businesses that can’t forecast or that expect a change from their historical usage, and there is even a program that offers price certainty while allowing customers to take advantage of a reduction in wholesale energy prices. Your supplier should offer to conduct an analysis and help you identify ways to lower your total energy costs that exceed a reduction in your basic energy rates.
What trends should businesses be paying attention to in the energy sector?
Unlike the old days, executives need to monitor the underlying commodity prices monthly or quarterly so they can spot opportunities to extend and renew their energy rates and contract terms. If you don’t have time to monitor the wholesale market, select a supplier that will do it for you and contact you when an opportunity arises.
Energy companies competing for business in a competitive, open marketplace foster innovation and technology developments, so be on the lookout for products and services that will help you monitor and control your daily usage and forecast your future needs. Don’t hesitate to suggest a new product from your supplier.
The key is selecting a trusted supplier that is compatible with your company’s culture and business objectives, because Pennsylvania business executives no longer have to settle for the status quo.
What makes PPL EnergyPlus different from other energy suppliers?
We’ve been in Pennsylvania for more 90 years so we understand our customers’ needs and the nuances of each city. At the same time, we offer the security of a multinational Fortune 500 company with a strong balance sheet. Our in-state network of power generation plants creates operating efficiencies by allowing us to deliver energy across very short distances.
But our greatest differentiator is our business model and our commitment to customized service instead of taking a one-size-fits-all approach. We consult with business managers and recommend specific ways to use power more efficiently before suggesting a customized slate of products and services
PPL EnergyPlus, LLC is an unregulated subsidiary of PPL Corporation. PPL EnergyPlus is not the same company as PPL Electric Utilities. The prices of PPL EnergyPlus are not regulated by the Pennsylvania Public Utility Commission. You do not have to buy PPL EnergyPlus electricity or other products in order to receive the same quality regulated services from PPL Electric Utilities.
Robert D. Gabbard is the president of PPL EnergyPlus. Reach him at RDGabbard@pplweb.com or (610) 774-4168.
Are we entering a golden age of gas? The International Energy Agency seems to think so, citing the environmental qualities, ease of use and competitive prices of natural gas in a recent report.
New technology is creating plant efficiencies and the evolution of shale harvesting is increasing supply and reducing transportation costs, says Terry Crupi, director of Natural Gas Marketing and Trading for PPL EnergyPlus.
“Natural gas is increasing its prominence in the U.S. energy landscape,” says Crupi. “And Pennsylvania executives have an added advantage, because the region offers a straightforward platform for choosing a provider and managing energy costs.”
Smart Business spoke with Crupi about the evolution of natural gas and what it means for Pennsylvania business.
How is natural gas evolving to meet rising energy demands?
Traditionally, natural gas served as a home-heating fuel and feedstock for the industrial manufacturing sector, which caused demand to soar during colder months in northern regions of the country and highly industrialized cities. By the early 2000s, there was a dramatic surge in the construction of gas-fired power generation facilities, many of which use modern, fuel-efficient, combined-cycle technology. As a result, power grids rely on gas-fired power plants nearly as much as traditional baseload generation facilities fueled by nuclear fission and coal.
This dramatic increase in demand for natural gas has altered consumption and changed the way gas is used by region and season. Although summer demand used to be driven by the need to fill storage caverns for peak winter months, peak flow conditions along the pipeline now occur in summer as well as winter, as gas-fired power plants are used to meet rising summer electricity demands. This has greatly increased the importance of natural gas in our country’s overall energy picture, and lower prices are causing many customers to switch to natural gas. Also, the momentum toward natural-gas-powered vehicles offers tremendous potential for gas to increase its prominence in the U.S. energy landscape.
How do Pennsylvania businesses purchase natural gas?
The structure of the region’s natural gas market has been in place for several decades and provides customers with the opportunity to choose a competitive gas supplier and manage their energy costs. The regulated side of the market includes pipelines and local distribution companies that transport natural gas to end-users, but their rates and returns are controlled by state or federal agencies.
Customers of all shapes and sizes can optimize savings by purchasing natural gas from unregulated companies, because they aren’t required to purchase gas from a local utility. Gas suppliers typically collaborate with customers to develop a flexible pricing structure that meets their needs and optimizes current market conditions.
What should customers look for when choosing a natural gas supplier?
Because the composition of natural gas doesn’t vary, customers should select a supplier based on other characteristics, including:
- License. Suppliers should be licensed by the state regulatory commission.
- Financial stability. Assess a supplier’s tenure, history and financial health, as well as the financial condition of its parent, because it needs excellent credit to procure large quantities of gas at favorable prices in the wholesale market.
- Customer service. Ask to see a sample invoice and review the supplier’s responsiveness to orders for triggering or fixing prices and process for issuing confirmations. Will the supplier help you set hedging strategies? Who will be servicing your account? Remember, the salesperson may not be your contact once you’re a customer.
- A straightforward contract. Make sure there are no hidden renewal options in favor of the supplier and that any index pricing is appropriate and utilizes standard industry publications. The tone of the contract is indicative of a supplier’s approach, so take note if it seems one-sided.
How can natural gas consumers protect themselves from pricing volatility?
Natural gas is an actively traded and highly volatile commodity, which helps customers lock in favorable prices, but that also makes it difficult to craft an effective risk mitigation strategy. Some customers set price targets that align with corporate budgetary objectives, while others study the market and determine pricing points to capitalize on dips in the market. Still others are simply content to receive market-based pricing by purchasing gas at index-related prices. Customers can employ options to establish some limits on gas price floors and ceilings, but the best practice is to set a strategy that aligns with your risk appetite and execute it well.
How will Marcellus Shale natural gas production impact Pennsylvania energy?
Pennsylvania gas consumers are already seeing benefits from the Marcellus Shale, because the increased supply and proximity to the market is lowering transportation costs and overall natural gas prices. In terms of the total energy picture, it’s also having an effect on electricity markets because plentiful natural gas, coupled with increasing costs of coal, is causing many older coal-fired plants to retire in favor of gas-fired generation. In fact, Pennsylvania is becoming a prominent natural gas producing state, largely due to the Marcellus Shale.
PPL EnergyPlus, LLC is an unregulated subsidiary of PPL Corp. PPL EnergyPlus is not the same company as PPL Electric Utilities. The prices of PPL EnergyPlus are not regulated by the Pennsylvania Public Utility Commission. You do not have to buy PPL EnergyPlus electricity or other products in order to receive the same quality regulated services from PPL Electric Utilities.
Terry Crupi is director of Natural Gas Marketing and Trading for PPL EnergyPlus, a competitive gas supplier serving industrial and commercial customers in Pennsylvania, New Jersey, Maryland and Delaware. Reach him for wholesale and retail inquiries at PPLRetailGas@pplweb.com or (610) 774-2310.
The introduction of Pennsylvania’s competitive energy market in 1996 was intended to aid businesses (and consumers) that were hampered by electricity rates that exceeded the national average by as much as 15 percent.
But despite the fact that companies have been able to request bids from competing suppliers and purchase electricity supply at lower prices, many continue to pay more than they need to because they haven’t shopped for services or capitalized on falling energy prices by requesting new quotes from competitive suppliers.
“Pennsylvania’s energy market has come back with a vengeance since 2009, but optimizing the potential savings requires new habits and a changed mindset,” says L. Gene Alessandrini, senior vice president of marketing for PPL EnergyPlus. “Just getting online and requesting a quote from trusted suppliers can produce substantial savings for businesses with very little risk.”
Smart Business spoke with Alessandrini about the opportunities to immediately reduce your company’s electricity costs and control future costs by shopping the retail market and partnering with a savvy provider.
Is this a good time to be shopping for electricity?
Absolutely. Wholesale power prices have dropped in 2011, as new companies enter the market and the state-imposed temporary rate caps expire.
Companies that initially shopped the market and signed contracts back in 2009 or 2010 may be able to obtain lower electricity supply costs today by requesting new bids, while companies that haven’t shopped for services can reap immediate savings of 5 percent to 20 percent by doing so. Once they select a provider and sign a contract, smart business executives can turn their attention toward continuous improvement and controlling future costs by finding ways to increase efficiencies and reduce energy consumption. And because companies can lock in electricity rates and easily create energy savings, they free up cash for reinvestment purposes.
How can businesses save money on their energy bills by shopping for supply?
The move to a competitive energy market affords businesses greater control over their operating costs. Today, businesses can select from more than 25 providers in many parts of Pennsylvania and partner with a suitable supplier who understands their business and works with them to make it more successful.
Competitive electricity suppliers are still licensed and regulated by the state, but they are incentivized to purchase energy at the lowest possible price and offer customers top-notch service, as well as education and energy-saving recommendations and tools, because they have to market their services and compete for customers.
But the process could be overwhelming for small to mid-sized companies that aren’t used to vetting suppliers and requesting bids for services. That’s why it is a good idea to secure quotes from a handful of trusted suppliers and then sign a contract to get the ball rolling. Achieve the savings available to you today and then work to improve your knowledge and use of the competitive market.
What do businesses need to know before they shop for electricity?
Buying electricity in Pennsylvania now encompasses three phases. First, buyers request bids to garner immediate savings. Next, they work toward future cost reductions by considering investments in lighting systems, new heating and air conditioning systems or more efficient manufacturing equipment.
Finally, executives should monitor the energy market and request new pricing during the contract term to see if they can secure even lower rates by capitalizing on Pennsylvania’s competitive market.
How do businesses go about shopping for electricity?
The website for the Pennsylvania Public Utility Commission (www.papowerswitch.com) offers buyers a wealth of information, but it’s easy to navigate the procurement process by following these easy steps.
- Briefly research the market, then complete the online authorization form and request bids from two to three suppliers that you know and trust.
- Suppliers will be able to review your company’s historical energy usage and expenditures and will discuss with you your company’s projected needs and service requirements.
- After reviewing the bids, simply select the provider and service package that best meets your company’s needs, then make note of the renewal date and be sure to repeat the process during or prior to the contract expiration.
What should businesses look for in an electricity supplier?
First, executives need to be concerned with business continuity and the financial strength and stability of their electricity supplier. But you should also select a savvy partner that offers more than a commodity. You should look for educational programs, a variety of product and service options and a consultative approach to suggest industry-specific, energy-procurement and energy-saving ideas.
There’s too much opportunity available to businesses for them to sit on the sidelines when, with a little hard work or even just a few clicks of a mouse, they can yield immediate and substantial savings on electricity.
L. Gene Alessandrini is senior vice president of marketing for PPL EnergyPlus. Reach him at firstname.lastname@example.org or (610) 774-4483.