Heads up, energy consumers: If you buy retail electricity or natural gas, “this is one of the best times in history to make that purchase,” says Luke McAuliffe, President of Transparent Energy.
In his article “5 Things You Need to Know about Buying Energy Right Now,” McAuliffe discusses the factors driving this opportunity:
- Historic Market Lows – Energy supply increases during economic slowdowns, such as that caused by the COVID-19 pandemic. This phenomenon occurs on the back of a long-term decrease in prices caused by the shift from coal to natural gas for electricity production. Add a warmer-than-average winter in 2019-20, and energy prices have plummeted to multi-year lows.
- Run a Competitive Procurement Process – Incumbent energy suppliers will act fast to try to keep their customers from seeking cheaper options from alternative suppliers. A competitive procurement process, such as Transparent Energy’s online auction platform, drives an average of 7%-8% in savings by attracting multiple suppliers to bid their lowest prices on the customers’ supply in real time with the option to lower prices as other bids are made.
- Know Your Supplier – As energy suppliers grapple with the effects of “desperation pricing” on their businesses, suppliers may experience financial instability. Customers will need to make sure they’re working with stable, reputable suppliers who are able to fulfill their needs.
- Buy Now – Even if Your Current Contract Isn’t Close to Expiring – Even if contracts are 12–24 months away from their expiration date, customers can still take advantage of current low rates. Waiting for contracts to run out means missing out on an especially unique opportunity for long-term gains.
- Go Long – Energy contracts traditionally used to be 24 months long with any term beyond that incurring a premium. With suppliers desperately seeking business, they are now offering up to 60 months on contracts, meaning customers can lock in low rates for a long time.
From these factors, it’s clear that now is the time to act to take advantage of historically low energy prices. Energy markets are volatile. Hot summer days are coming, and prices could increase quickly. In times when budgets are strained, freeing up operational funds through lower energy rates is a smart move.