How to lower your electricity costs by taking advantage of the retail market Featured

3:45pm EDT July 7, 2011
How to lower your electricity costs by taking advantage of the retail market

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 lgalessandrini@pplweb.com or (610) 774-4483.