Electrical Futures

[Let'sgoflying!]

I am getting an offer from one of the local electrical providers to contract our power for the business, for up to 5 years. (lock in at a certain price)
I've never seen such an offer (a contract).
No prepayment, just guarantee the business and they will guarantee the price.

8, 9, 10c per kWh for 5, 3, 1 years.

I will have to compare with current rates, not sure on that but at a glance it seems much less. Wait its 11% at the high end.

Funny thing is; I have to sign by Wednesday or no deal because of the volatility of the natural gas market! (how can 48 hrs make a real difference in prices, if they are willing to lock me in for 60 months?!)
[Sounds like they are trying to pre-empt a competitive quote.]

Also no mention if I under-use or over-use compared to now... I guess its the same rate.

 

[wsuffa]

Dave,

I negotiated a couple of those deals for my former employer.

They will typically lock a rate for 24 to 48 hours because of the fluctuation in energy prices. The fluctuation is typically not much over a few days.

Read the contract carefully. There are usually caps on max/min amounts you can use.

Make sure the provider is reliable. You may get stuck if they go belly-up.

Also, see if there is an aggregator, maybe a trade association or something. Sometimes you can get a better deal...

Shop around.

bill

 

[Let'sgoflying!]

Thanks Bill, I knew you'd know.
How does one find out who the local competitors are?
My zip is 79734 if that helps.

 

[wsuffa]

Dave,

Start your research here:

http://www.powertochoose.org/yourchoice/aggregators.asp

There is a link to list of aggregators for residential and non-residential power.

If your company belongs to a state association, they may be affiliated with an aggregator. For example, Texas Association of Broadcasters had a deal with one particular aggregator out of Midland. It helped the negotiation process, and was better than each small broadcaster doing it themselves. The big owners usually could negotiate a better deal themselves.

Pricing is based on volume, the number of locations served, and whether the power use was "steady" or "intermittant".

 

[Let'sgoflying!]

Turns out to be less than advertised, if not an outright scam.

Their paperwork advertises "$4500 savings!" but you have to dig a bit to find out where they get that. It is not based upon an improvement over what you are paying now, it is based upon their price being better than the "PTB" an unadvertised code for "Price To Beat" which is in effect a completely fictional number!

So they want me to start paying 15% more RIGHT NOW in order to lock in a price for the 5 years.

AND they quote a $ per kWh that is based upon ONLY the electricity charge, and excludes the Line Charge... so if you were to compare their rate with the one on your bill right now you would be seriously in error.

It is still possible that if electricity skyrockets (good probability) in the next 5yrs that this will be a good deal but I am a bit put off by the tactics. Plus they put a 48hr limit on the contract, as in "Hurry this deal is going to be gone Wednesday".

If they had been very honest and sold it as a hedge against future electricity prices I would talk - but this seems underhanded.

 

[wsuffa]

Dave,

Welcome to the world of deregulated electricity. Glad you caught it before you signed up.

Bigger really is better in negotiating these deals. That's why the trade association deals often are the best way to go.

 

[James_Dean]

How much are you paying per KWH now? My company is currently paying about $.04/kwh. We are a 4 megawatt connected load and use approximately $1,000,000/year. There are deals of the type you describe available, but are almost always very specialized and not usually more than very expensive insurance.

Another area of great potential savings is to become an interruptable customer. In some areas of the country you could realize a 60% reduction in energy costs.


James Dean