GPI 378 – In deregulated states, assign your company’s utility broker to check the current cost of electricity every month.

In some states, electricity is deregulated (i.e. Texas) and providers number in the hundreds.  Because of the competition, there are always numerous changing electric rates offered every day in the open market. Because of these options, one can buy contracts for many different lengths of time while spending a lot of time watching rates. This leaves less time to do other things for the company. Do not waste your time on a specialized area. Hire a broker.

Hire a utilities broker and try these suggested steps:
Interview and consider seriously hiring an outside utilities broker.  They know the markets, rates, opportunities and do this analysis every day.  They do it far better than you and they are paid to save you money through the receipt of their commission.  You want them to make money since it is reflection of your company’s savings in utilities procurement.

• Assign the broker to look for great rates given your company’s historical and forecasted electrical usage. Let them keep tabs on the market. They do this every day and know where opportunities lie that you do not.
• After the broker has laid out several contract options, he will offer you an array of rates and contract periods (i.e. guaranteed usage limits, one year, three years, fixed rates, variable rates, guaranteed minimums, etc.). To be safe initially, sign up for a six month or one year fixed rate contract and tell your broker you want him to begin to monitor the market for cheaper rates going forward.
• Sometime in the future when the market offers a substantially lower kilowatt rate than your current cost, consider signing a future contract for the lower fixed rate. This lower contract will kick in once you are finished with your current contract. It may or may not be your current provider but you do not care. The broker selected a group of known and well regarded players in the market.  That is what he does for you.  Your selection from any of them should be safe and secure.
• Your goal is to tie into a lower rate in the future so instruct the broker to keep monitoring the market for you. As long as you can always sign a future contract for a lower rate, you will be able to comfortably forecast electricity cost and know the maximum cost you will be paying. For manufacturers, this is important.
• Once you receive a new bill from a new contract, send the broker invoice copies to review and approve. Ensure the rates are billed per your contract and all of the numerous fees on the bill are correctly calculated going forward. Instruct your broker to review your bills every few months to ensure your firm is getting the lower rates that your broker approved.