Energy prices are at the lowest point in five years – a fact made clear when the price of the U.S. oil benchmark dropped below zero dollars per barrel.
These unusual conditions may bring good news to energy consumers: It is the best time in years to secure low energy-supply contracts. Customers in deregulated energy markets can take advantage of these prices by locking in a low rate for the length of their energy supply contract.
But time is of the essence: How can buildings move quickly on this opportunity? Traditional supply contracting is done through a sealed bid or request for proposal (RFP) process. While this method is business as usual, the process may be too slow to capitalize on time-sensitive market conditions. Typical methods aren’t always a good fit for atypical conditions.
Reverse auctions are an alternative approach that offer quick action and an even more competitive procurement process. With this method, a live, viewable reverse auction platform enables suppliers to bid on a customer’s energy load while being able to see and outbid each other’s offers. The suppliers compete to provide the best price for the customer, resulting in savings of 7%-8% on their energy bill, which is more savings than any other procurement process.
In today’s unprecedented energy-market conditions, savings could be even higher. Low prices put pressure on suppliers to put out more bids, and more and more of them are joining reverse auction platforms to reach new customers – even more competition to benefit the customer!
Supply contracting offers control over the energy-cost line item on the utility bill – the cost of the energy as a commodity bought and sold in the market. What about the rest of the charges? Are customers with existing contracts or in regulated markets out of luck? Not quite!
Supply contracting is just one component of rate optimization – a best practice in energy management involving efforts to lower utility spend through multiple mechanisms. Beyond supply contracting, correcting utility billing errors can avoid costly overcharges. Utility bill audits range in their level of detail and savings potential: High-level load profile analysis can identify monthly or daily anomalies indicating large errors.
The most comprehensive audits use proprietary software to analyze each charge on a utility bill in detail. In addition to obvious anomalies, audits using software catch smaller errors that add up to significant overcharges when they go easily undetected for a long time. In some markets, rate optimization includes evaluation of unique opportunities like community solar offerings where customers buy
As building owners and operators face continued pressure to reduce operating expenses in light of COVID-19, rate optimization becomes an even more timely action. The prices are low, and the demands to cut cost are high, which mean the benefits of rate optimization are at an all-time high.
Please reach out to me to learn more about how to get started with rate optimization.