As electricity prices continue to drop, is now the time for businesses to evaluate electricity prices offered by suppliers?
Yes. With the overabundance of natural gas supply from Marcellus Shale driving electricity prices lower, there has never been a more advantageous time for businesses to evaluate the prices, products and services energy suppliers are offering. Energy suppliers are competitively offering some of the best pricing options in response to the current market trends. However, although businesses are seeing some of the lowest prices for electricity, the trends are cyclical and prices may very well trend upward once again, says Andrew Bakey, P.E., CEP, regional sales manager at PPL EnergyPlus.
“That is why assessing current prices from suppliers and researching what products suppliers can offer is in a business’s best interest to help it take advantage of the opportunities that exist in the market today,” says Bakey. “To keep your business as a customer, a supplier should be well versed in market trends and should be providing you updates on energy prices and industry related news affecting the energy market and should be offering your business the tools to understand and apply these fluctuations in price to your benefit.”
Smart Business spoke with Bakey about what to look for in an energy supplier.
Should businesses be looking to lock in electricity prices now?
Absolutely. We haven’t seen wholesale electricity prices and the natural gas market trending at levels this low in several years, which is good news for businesses. It’s a good market when you have so many choices and the ability to compare and contrast them. Keep in mind, though, that while now is a great time to shop for the some of the best prices, the market is volatile and electricity prices are cyclical, which means they will trend upward at some point. That’s why there has never been a better time to evaluate your energy supply needs and consider locking in your supply price to take advantage of low electricity prices.
What else should businesses look for in a supplier beyond price?
Certainly, price is a driving factor to help a business meet its bottom line. However, a solid energy supplier can offer much more beyond price to help your business in the long term. PPL EnergyPlus, for example, offers a consultative approach, helping customers understand the market and navigate fluctuating market trends with prices and demand.
Your energy supplier should constantly review your business needs in tandem with market trends to be sure the products and services you’re purchasing are giving you results. Your supplier should create a relationship with your company that goes beyond the sale. Your energy supplier can help you take advantage of pricing trends and other products and services to help your business achieve its energy purchasing objectives for the long term. Your supplier should know what peak times are crucial to your business’s energy usage and be able to deliver customized solutions and strategic options to help you benefit overall.
Another strategy is to purchase a product that allows you to dollar-cost average electricity. You can purchase a three-year contract that locks in 100 percent of your power needs in year one, 66 percent in year two and 33 percent in year three. The next year, you can lock in the remaining 34 percent for the second year, buy an additional 33 percent for year three and extend the contract to buy 33 percent for the fourth year. This allows you to dollar-cost average your purchases but still gives you time to find the soft spots in the market.
Do suppliers offer the same types of products and services?
No, and some vary greatly. PPL EnergyPlus, for example, offers a core set of structured products. Our products offer varying degrees of flexibility and stability, with budget certainty and the opportunity to take advantage of the market. We have the ability to tailor these products to specifically align with your business’s direct needs.
An energy supplier that can customize their product line to adjust to your business’ unique energy usage needs is crucial. Your energy supplier should understand that not every business operates in the same manner or has the same energy usage needs, so why should the products you choose be regimented? A comprehensive energy supplier will also offer your business services supporting your business objectives such as demand response, renewable energy services, mechanical services and other types of advanced electricity supply products and services. Finding a supplier that offers a full array of services allows your business to benefit from a comprehensive energy supply solution. Your energy supplier should know your business well enough to provide guidance as to the right type of products, services, terms and other supply solutions that would be the most beneficial to your business.
What services are available for businesses to be greener and more energy efficient?
Many suppliers offer a comprehensive program to help businesses support their green initiatives by minimizing their carbon footprint and investing in a greener future. We offer a green power program through our Renewable Energy Program for businesses. The program provides a financial foundation for the development of additional renewable energy projects, reducing the amount of energy in the electricity grid generated by traditional fossil fuels. PPL EnergyPlus offers businesses the opportunity to participate in this program and to purchase Renewable Energy Credits, which we then retire from the energy marketplace. An energy supplier that offers a renewable or green program can help you evaluate your environmental footprint and advise on the type of renewable energy supply that allows your business to best meet its corporate commitment toward greener initiatives.
PPL EnergyPlus, LLC is an unregulated subsidiary of PPL Corporation. PPL EnergyPlus, LLC is not the same company as PPL Electric Utilities Corporation, the electric utility. The prices of PPL EnergyPlus, LLC are not regulated by the Pennsylvania Public Utility Commission, and you do not have to buy electricity or other products from PPL EnergyPlus, LLC in order to receive the same quality regulated services from PPL Electric Utilities Corporation.
Andrew Bakey, P.E., CEP, is regional sales manager at PPL EnergyPlus. Reach him at (610) 774-5227 or ABakey@pplweb.com.
Insights Energy is brought to you by PPL EnergyPlus