By doing nothing, you will essentially be forced to pay the highest rate possible. This "rate to compare" is based on worst case scenario averages, and is often referred to as the "rate of last resort." It’s essentially a default rate that is usually relegated to those customers that don’t qualify for a 3rd party supplier program (i.e. bad credit, slow pay history, bad usage patterns, etc.).
You will either pay the utility company's floating default rate, which is calculated hourly based on overall demand (which could more than double your current bill), or, if you are small enough, you may be put on their default fixed rate, which is no longer regulated. Either way, the utility company cannot offer stability of rate, or price certainty in a deregulated zone, which ultimately leaves you exposed to today’s volatile energy market prices.
Shopping for energy, as in many other critical business decisions, can be very time consuming and confusing. Purchasing energy is like purchasing insurance, so your electric supplier choice is exceedingly important. The lowest rate isn’t always the best buy, or the safest buy. Furthermore, suppliers do not offer direct customers their lowest rates, as these rates can only be achieved through intermediary brokers and/or competitive platforms such as Unified Energy Alliance. Finally, supplier’s offerings are often unclear and their terms and conditions (i.e. hidden charges and requirements) can place an uneducated shopper at a disadvantage.
At Unified Energy Alliance, we will always prequalify and engage only those suppliers who prove to be both stable and compatible in relation to your requirement needs. Our proven approach creates a real-time, hyper-competitive bidding environment that ensures our clients the best quotes and products available in their demographic market. By making suppliers compete for your business, making an electric supplier choice is a win-win! In addition, we will ensure that there are no hidden fees or charges, and one of our energy consulting partners will take the time to educate you on the process and the industry to protect your future interests, not just sell you a rate.
Always beware of quotes that seem unrealistic! Quite often, we see quotes from certain suppliers that seem to be substantially lower than other quotes for the same customers load requirements–sometimes as much as a half a penny to a whole penny less. This is a red flag! Unless there’s a significant credit issue, it’s extremely unusual for one supplier quote to be that much lower than all others. To make certain that you are receiving an apples–to–apples quote, be aware of the following issues:
In the energy industry it's important to measure offerings based on what they include, not what the numbers reflect, or what the titles say. Quite often we hear terms such as "all inclusive fixed energy rate", which basically means that the energy component (cost per unit) of your rate is fixed. Unfortunately, there are many other components associated with energy purchases, and these components do not fall under the basic energy cost. The key is to always compare suppliers' contracts Terms and Conditions, not their product titles or quotes alone! At Unified Energy Alliance, we have a legal team that will help you to get a true apples to apples rate comparison, and also ensure that you get what you were promised over time. Examples of energy components that need to be accounted for are as follows:
In addition to the energy costs, you could also be charged additional taxes depending on the state in which you are operating. Quite often, these taxes are not included in energy quotes (often applied during billing), but instead show up on your invoices as a surcharge. These taxes normally come in two forms:
These taxes are set at a predetermined fixed rate and applied to your agreed upon energy rate; therefore the amount that you pay is based directly on the price per Kwh that you are paying during any given billing cycle. It's important to note that this tax is embedded in your local utility company's price to compare. Quite often, competing EGS quotes will exclude this tax and offer rate comparisons that are minimized to win your business. By magnifying savings, uncompetitive suppliers/brokers entice uneducated consumers into overlooking viable solutions and put their clients at risk.
These taxes are set at a predetermined fixed rate and applied to your total utility invoice; therefore, the amount you pay is based on the total dollar amount you spend during any given billing cycle. It’s important to note that this tax is not embedded in your local utility company ’s price to compare, but instead represented as a line item. On the contrary, utility companies will embed this tax into a negotiated EGS rate, which ultimately makes the rate look higher than it actually is, but more importantly, creates the illusion of an adjustable fixed rate. Because sales tax totals will vary from month to month based on usage/costs, so too will a fixed rate that has this variable tax embedded.
You should be made aware of these charges prior to signing, and always be sure that you receive an apples-to-apples rate comparison savings analysis.
A common mistake amongst suppliers/brokers is combining the supply/generation and transmission portion of an electrical invoice with the distribution portion to create an exaggerated rate for comparison purposes. This over-inflated rate enables them to create the illusion of larger savings to the client when offering a savings analysis. The three portions of a utility invoice are:
This portion of the utility invoice is not competitive; therefore, its data should not be used at any point during a cost comparison analysis.
While this portion is not competitive, its data is relevant to a cost comparison analysis. Basically, this cost will follow whoever purchases your energy needs, and they will then pass it on to you. If you opt for the utilities default rate option, transmission is reflected as a line item cost. When you switch to an EGS, this line item is removed from your invoice and embedded into your negotiated energy rate. In certain states, transmission is an independent charge that is not relative to the price to compare as it remains a constant, independent price component that cannot be included in the EGS or the Utilities Price to Compare.
This portion of the utility invoice is competitive; therefore, it should be used in correlation with the transmission charge during a cost comparison analysis.
Utility Rate = Total Energy/Supply Costs (taxes embedded) + Total Transmission Costs / Usage
Competitive EGS Rate = Negotiated Rate + transmission (if applicable) + Utility Taxes (if applicable) / Usage
In the energy commodities industry, not all contracts are created equally. Similar to insurance policies, energy contracts can be manipulated to create the illusion of a lower quote, only to leave you exposed to back-end usage penalties. It’s important to fully understand how these risk variables affect your long-term pricing strategy, so you can ultimately determine what premiums should be included to protect you energy interests. At UEA, we know how to protect our clients from risk, and force suppliers to assume liability on behalf of our clients. Sometimes it’s better to pay a little more now and know exactly what you are getting, than pay less only to get blindsided with back-end usage penalties!
Don’t ever agree to anything until you have thoroughly examined the Terms and Conditions on the "Supplier Agreement." Unfortunately, it’s common practice today for an EGS to sign clients without offering full product disclosure. Quite often, call centers are used to call clients and offer them empty quotes, in most instances without even providing them with a copy of the contract to which they are verbally agreeing. It’s important that you always require the EGS to provide you with a copy of the supplier agreement for your review prior to signing, and always make it clear to them that you are not agreeing to anything until you review the documents. Also, if a supplier ever tries to use the "we don’t require a contract" line, or the "we don’t force you to lock anything in" argument, that only means that they are not willing to offer a binding offer–beware!
Whatever the case, Unified Energy Alliance will help you fully understand your options, and guide you along the way. Allow our Consulting Partners to maximize your savings opportunities while protecting you from the risk associated with making an uneducated decision.
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