Constellation NewEnergy participated in GlobalCon, an event in Philadelphia, PA. presented by the Association of Energy Engineers, designed specifically to educate individuals interested in the latest developments in the energy field, explore new technologies, and compare energy supply options.
As a panel speaker at the event representing Constellation, I pulled back the curtain on the electricity buying process for first time energy shoppers in the Pennsylvania market. Here are a few highlights of the presentation that may help you when considering switching suppliers:
A fixed price product is low risk– fact or fiction?
Fiction. Both fixed price and index plans carry “risks” and it depends on how you define your risk tolerance as well as what you are looking to accomplish in your buying strategy. With fixed price, energy costs for the term of an agreement are known, so you have budget certainty and avoid the risk of prices rising above what you may have allocated. The risk of fixing a rate is that market prices may drop below your fixed rate. Indexed rates can take advantage of price dips, but they’re vulnerable to price spikes. However, product options are not limited to an either/or proposition——you can also mix percentages of both fixed and index components to find the right mix for your risk tolerance.
Aggregations – bigger is always better– fact or fiction?
Fiction. Competitive retail suppliers already act as virtual aggregators, bundling retail customers into portfolios they supply from the wholesale market – thus collective “buying in bulk” may sometimes result in little or no additional difference in price. However, aggregation and buying groups can sometimes secure more favorable contract terms and product structures. Don’t assume participating in purchases under an aggregation will cost less than working directly with a supplier .
Buying energy is all about shopping for price– fact or fiction?
Fiction. While you could just get quotes and pick the lowest, such an approach may not be in the best interest of your business. Here’s why:
Retail energy fixed price quotes are driven by two major factors:
- Load shape (which is set based on historical usage)
- Market levels (which vary daily)
While multiple quotes can identify outliers, focusing on a strategy that manages the market changes may be your best approach. The market volatility from one week to the next usually overshadows the differences between suppliers.
Your choice of a retail supplier and how its products and services align with your energy strategy also add to non-price considerations.
If I switch away from the utility, my service will suffer– fact or fiction?
Fiction. Your utility remains responsible for the transmission & distribution. When switching to a competitive supplier, your utility:
- Continues to invoice for distribution charges and supplier separately invoices for electric supply and other delivery costs
- Continues to distribute power and be the point of contact for service disruptions
Find out more about switching suppliers in PA, visit www.newenergy.com/Pennsylvania, or the PA PUC Website www.papowerswitch.com