Electric Energy Procurement
Power Connection assists clients across all deregulated electricity markets in the United States, Mexico, and Canada. Today, at least seventeen states and Washington D.C. are either fully or partially deregulated where end users have the ability to shop for a competitive supplier. Power Connection leverages its nationwide reach and experience with its regional presence and knowledge to assist our clients in making the best energy decision specific to their situation and ultimately control their energy costs better.
The price of electricity per Kilowatt Hour (kWh) can fluctuate based on changes in natural gas and oil prices, weather, political events and other economic factors. In order to make an accurate comparison between the offers you receive, understanding what is or is not included in the price is important. Common components that comprise an electricity rate are:
• Energy: The cost of the commodity itself and the main component of your electricity supply. This will be what the supplier calculates to purchase the amount of power you need on the wholesale market for the term of your agreement.
• Capacity: This covers the cost to help guarantee sufficient generation will be available to meet the demand of the electric grid at all times.
• Ancillary services: Charges to ensure the that electric grid is functioning smoothly and there are reliable operations.
• Losses: Charges for the energy that is lost during transmission from the generation source to delivery at your business.
• Transmission: The cost to move power from the generator to your local receiving point.
• Renewable Portfolio Standards (RPS): Recovers costs if your state has implemented mandates that require suppliers to purchase a portion of their energy from renewable sources, such as wind, solar, and biomass.
Depending on the supplier, these charges may be included as part of the price quote, or they may be passed through as separate charges on your bill. A rate that does not include every cost component will be lower, however in the long run could be more costly. That is why it’s important to work with a company that has a good understanding about energy procurement and various supplier agreements and can better educate you regarding which product, offer and suppliers will work best for your business. In addition to the pricing components, considering your company’s risk tolerance, business goals and need for budget certainty can help determine if you are more comfortable with a fixed or variable pricing structure.
A fixed price allows you to lock in a set rate per kilowatt hour (kWh) over a designated time (contract term) for the generation portion of your electricity bill. Your monthly bill will vary based on your consumption, but the rate you pay per kWh will remain constant. This option allows customers who prefer price stability a higher level of budget certainty.
If your company is able to withstand the potential highs and lows in the market a variable price may be an option. This type of plan tends to work better for businesses with a higher risk tolerance as market rates are changing regularly based on supply and demand, weather and other factors.
Our electric energy procurement services are available to businesses located in many states including: