To Buy or Not to Buy: The Question Concerning Your Energy Purchasing Options
By: Brian White
Municipal Program Director
Electric and natural gas purchasing is a viable option for most municipal and commercial clients throughout New England. Typically, when shopping for your energy supply, various energy suppliers provide their quotes with new rates, and your decision comes down to price, purchasing strategy, and the terms and conditions—but what about timing?
Many purchasers trust Freedom Energy as their energy advisor to manage the entire bid process for them, and to make recommendations based on the client’s energy requirements, business goals, and sustainability objectives. Others may prefer to do this on their own or with another energy firm. If you manage this yourself, running a City, Town or any business is time consuming and for most, the focus on the energy market is not top of mind. As a result, the decision to investigate and review offers for the next agreement tends to be pushed down the road, sometimes until the month before the contract expires. You may not realize it, but timing can have significant impact on your energy costs. If you’re managing your energy portfolio yourself, Freedom can help by providing pertinent energy market updates, offloading workload, and supporting your budget requirements and energy objectives.
New England is in the middle of a market spike and calendar year 2022 is trading at levels not seen since the Polar Vortex (or Hurricane Katrina if you’ve been doing this a while). If you already have an energy contract in place for 2022, you’re covered for now. That’s good news—but how long until calendar years 2023 and 2024 begin to shoulder some of the pressure that’s driving energy costs upward? More importantly, when will you act?
Energy buyers can purchase gas and/or electric agreements several years in advance of the start date. Freedom Energy is advising clients and recommending they take advantage of the market opportunity right now to capitalize on the outer years while prices are still trading at reasonable levels.
The graph below illustrates just how quickly markets move. See calendar year 2022 (yellow), and while 2023 and 2024 have also increased over the last several months, it’s not nearly as drastic.
Opportunity Awaits: Act Now
These market conditions indicate significant opportunity for Cities and Towns, or any commercial account that has long term requirements, to take action to plan for sustainable energy costs.
You might be thinking–why now? We have 18 months left on our contract, it’s so far off and I don’t have the bandwidth to focus on this right now …
Ask yourself, do you typically purchase electric and gas when markets are in a good place or when your contract is about to expire? Freedom Energy’s Municipal Team has advised and helped several Cities and Towns secure energy agreements that begin in 2023 and beyond because the offers are at or below their current rates.
Imagine knowing your electric or natural gas rates are secured through 2027 while keeping the costs neutral or even reducing them – that’s sustainability!
There’s over a 2-cent difference per kWh between 2022 and 2023/2024 right now which amounts to significant dollars. Now is the time to review your options. Do not wait until 2023 starts looking more like 2022—opportunity cost awaits.
The best part, Freedom Energy will work with you to explore your options for free and without a commitment to sign. We will prepare and present a Bid Summary and Recommendation for no cost. You will come away knowing exactly what’s available, what the impact on annual spend will be, and be prepared to have that discussion internally. Understanding your options and deciding whether it makes sense to execute or keep monitoring is the best defense against a volatile market and that’s exactly what we have right now. It costs nothing to look.
Freedom’s Municipal Energy Team works with and advises more than 50 municipalities throughout the Northeast, and we look forward to working with you. Please reach out to me firstname.lastname@example.org or 508-944-4656 for a free consultation.