1) Unlimited usage – meaning that the rate will be the same rate no matter how much energy your business consumes. In broker terminology when we discuss contracts we refer to this in swing or bandwidth.
2) Line losses. This is crucial especially if you don’t have unlimited swing (usage). If your contract does not include this unlimited usage is of upmost importance. When energy is delivered from the hub to the customer typically about 8 to 15% can’t get lost before reaches the customer. This means that the customer would have to buy more therms to keep up with the usage. Since they have to buy more therms you will hit the 25% standard limit of bandwidth/swing.
3) Kilowatt hour (kWh) is a unit of electricity supply that is the basis and tells you how much energy you consumed. The more kWh you consume, the higher amount your bill will be. The pricing of a kWh gets tricky with the more energy your business consumes.
For example, there are usually different rates for “peak” and “off peak” hours. The reason for this is, your Li a utility needs to manage the electrical grid and make sure there aren’t any blackouts or stuff like that. So, higher kWh pricing during peak hours is one solution for dealing with high electric or kWh demand.
4) Therms- One therm equals 100,000 Btu. However, to keep things simple, a therm can be understood as one unit of natural gas and could be priced from 30¢ – $1.00. 30¢ – $1.00 is a random average. However, prices can vary tremendously based on location, usage and other factors.
5) Can prices be different from business to business. Absolutely. So don’t be worried if the price changes from one day to the other. If the price of the broker stays the same that means either he is taking a loss and keeping the price the same because he wants to make the commission or make a sale, or prices went down and he’s making more of a markup. Since things are confusing I always like to keep the price the same as much as possible.
6) Custom Pricing. Matrix pricing is commonly used for door to door sales. As long as you fit within the average, you’ll get approved. However, if your usage and you have a bad load factor (meaning, your electric isn’t running efficiently), there is a good chance your contract will be cancelled. As a result, you will need to resort to custom pricing. Custom pricing is the fairest way to price gas and electric. You won’t be paying a high markup, but you might get a worse rate than you originally had. Most matrix rates are offered online with no broker. Proceed with extreme caution. Because your contract probably is bare with no added in benefits. These rates are “low”, however If you factor in the extra charges, you will Be probably paying the same amount with zero service. My recommendation to everyone is, seek out a honest broker who will take care of your contract and there won’t be any surprises.
