As energy advisors, we often see clients approach energy supply agreements like they would their cable provider; lock it in for 12 months, and once it’s due to expire in a couple of weeks, renew it for another 12 months. Simply put, this strategy is not the best approach.
During the energy procurement process, our team finds the greatest success for our clients when they are proactive and strategic in their approach to renewing supply contracts. Often, clients start tracking quotes 30 months before their contract expires. This approach has led to far less volatility when compared to organizations currently looking at pricing for the fall and winter of 2022.
In a volatile energy market, such as the one we are currently in, it is not uncommon for clients to see a rate increase of $.002/kWh or $.0035/kWh over just a few hours. Gone are the days where quotes in the morning remain unchanged by 5:00 pm the same day. Freedom Energy encourages a proactive approach, and our clients that have adopted this approach have not experienced the same market swings as clients waiting to renew until supply contracts are nearly expired.
Applying this proactive approach to real client examples can make a significant difference. For example, a client seeking a pricing proposal with a December 2022 start date and experiencing delays in decision-making may see a quote increased by nearly $0.02/kWh for every term offered. Compared to a client with an October 2023 start date over the same time, who may only see an increase of $.005/kWh. This example (based on recent experiences our team encountered) reinforces the notion that a proactive approach can help impart better results.
In an energy market that looks to be worsening long before it gets better, we urge our clients to embrace a proactive approach to renewing supply contracts long before they’re up for renewal. If you are ready to start looking ahead regarding energy procurement, reach out to our MA Municipal Team today. It costs nothing to look.