Carol Anne Watts | Senior Director of Sales & Sales Operations
Choosing the opportune moment to implement an energy supply agreement can be overwhelming. Opting to procure multiple years’ worth of energy on a single day involves a calculated risk, prompting many energy buyers to seek the counsel of experts to navigate their procurement process. Upon analyzing the trends of recent years, certain patterns emerge, suggesting that the present moment could be the optimal time to make a purchase.
Before making a decision, there are important factors to consider:
Review your current agreement’s expiration date: The end date of your existing agreement will significantly influence when you should start exploring your next options. At Freedom Energy, we guide clients on how and when to make purchases, empowering them to be well-informed buyers.
Consider your future plans: Ask yourself these questions when determining the right timing for your next contract:
- How long will your business be in its current location?
- Are there any significant changes in energy usage expected over the next few years?
- Do you have any green initiatives in place that could offset energy usage?
- Are there any plans for onsite generation that may shift the load from one commodity to another?
Now, the big question: Is it the right time to buy? Energy buyers often ask us this question daily. If you have already considered the previous questions and identified an opportunity, here are some data points to further support why now might be the ideal time:
The chart above tracks the cost of energy (CY24, CY25, CY26) in ISO-NE from January 2020 to June 2023.
Historically, prices showed consistent increases from June to December of 2021 and 2022. If 2023 follows this trend, waiting may not provide any significant market movement for energy buyers.
Considering the favorable trading of gas prices following a mild winter, increases in summer demand and speculation about next winter’s temperatures could negatively impact forward curves. If committing to 100% energy fixing seems unappealing, it might be worth exploring hedging at least 50% under these market conditions. Your Energy Advisor at Freedom can assist in modeling different scenarios and set realistic expectations for potential costs should you decide to wait.
This article is an excerpt from the June 2023 Freedom Energy Newsletter published on June 30, 2023. To read the original article click here.