You run a large business and are tired of the big swings in your energy bills. You speak with a couple of energy brokers and ask them for their lowest fixed price per kWh.
The energy brokers get back to you with their proposals; their pitches and prices look alike. Usually, you would always choose the cheapest price, just like any other vendor. For some reason, you get the feeling that energy is more complicated.
Why should you not make procurement decisions solely based on price, and what can go wrong if you do?
- The supplier could go bankrupt because they gave a price that ultimately caused them to lose money.
- Payment terms that don’t match your cash flow. Especially for dual billing. Will my contract be terminated for non-payment on time?
- The contract will pass through capacity or transmission adjustments. This can be done through rate increases.
- Choosing a broker you dislike because they had the better price.
- Losing a good rate due to bankruptcy because you now need to replace your old contract, and the rates aren’t as good.
- Lose money because rates are higher in the market, and you can’t live out the full contract because the supplier is no longer in business.
- Broker needs to be established and be there when you need them. For example, suppose you have a billing mistake and need customer service. In that case, you’ll be doing that by yourself because your broker left the industry.
- You’ll be stuck on the phone with customer service.
My father always said you get what you pay for. The cheapest price is only the cheapest option until there is an issue. Sometimes, if you choose the cheapest fixed option or broker, there could be many ways that you will end up paying more. If your bills are small, it will be easy to fix. However, if you manage a larger business with high bills, it will take loads of time. You’ll have to jump through hoops.
The slightest mistake can be the difference of thousands of dollars in losses. The last thing you want is to be left in the cold and on the phone with customer service because your broker is unavailable. Therefore, choose someone you trust.