Want to know how your company’s energy prices are impacted by the supplier you choose? Read on.
Like most companies, your electric or gas service is being provided by either the local utility company, an Alternative Retail Electric Supplier (ARES), and/or an Alternative Gas Supplier (AGS). If the local utility supplies your energy, you are under a “bundled fixed rate” cost structure (if available) or an “hourly” cost structure.
Bundled fixed cost structure – governed by the State Public Utility Commission, which must also approve any cost increases. The utility company, not the customer, carries all the risk. Customers under this cost structure can typically save 25% to 35% off energy costs if they are served by an ARES. Importantly, the supplier continues to carry all the risk!
Hourly cost structure – energy is purchased on the “open market” (also referred to as Local Marginal Pricing or LMP, Spot market, Real Time or RT). In deregulated states, customers are moved to an hourly cost structure when the method of energy delivery is declared competitive. Customers will initially see a decrease in their costs compared to the prior bundled service, but may not realize that the customer now carries all the risk!
The chart at the right paints a picture of the extreme volatility of an hourly market (red line). Consider how this fits within your company’s risk comfort level. As indicated below, the fixed cost (blue line) structure eliminates this risk.
The above chart is a comparison of actual Real-Time Local Marginal Pricing for the PJM ComEd Node in Chicago for the month of July 2011. The red line reflects the pricing of the hourly market. The blue line reflects fixed pricing offered by third party providers during the same period.
More about Alternative Retail Electric Suppliers...
As third-party energy providers, the ARES offer the sole means for customers to reduce or remove risk, but they are a for-profit enterprise focused on their own best interests.
Only BKE Energy can provide you with an independent, unbiased recommendation that best fits your risk tolerance. And clients can rest assured they are not paying for a “middleman.” The ARES will simply move the commission from their direct sales team to BKE Energy. There is no increase in your costs, and you have the assurance that someone has your back.
“Many clients being served by an ARES think everything is just grand and that they’re protected from hourly market pricing. In fact, if customers don’t follow up after their original contract ends, the ARES will convert their service to hourly market pricing. Clients rarely pick up on it.”
Interested in an energy plan that meets your comfort level? Contact BKE Energy today to help you lower or completely remove this risk!
© BKE Energy, Inc. All rights reserved.
Design S.MARK Graphics