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I am looking to enter into a new electricity contract? What should I look out for?

Your energy costs are expensive recurring cost of business. Prevent unnecessary increases to this expense and avoid these often over-looked mistakes to limit your early termination fees. Before you sign a new contract, make sure of the following:
    · Do you have an outstanding contract? Make sure you are not signing a new contract that becomes active prior to the expiration of your current electricity contract.
    · Has another individual at your firm authorized a broker or REP to your energy business? Ensure that another authorized person at your company has not previously signed a contract with another firm. Limit the number of authorized energy procurement officials and signatories at your firm.

What is my Contract Expiration Date? Why does my expiration date matter?

Every electricity contract has a valid term for which the Retail Electricity Provider (REP) and consumer are obligated to the terms of the contract. Your Contract Expiration Date details the date at which your contract can be abandoned. Post expiration date, REPs may increase the price per kilowatt-hour or move you to a higher variable price. It becomes your responsibility as a customer and power user to check your contract term and your current electricity rate. Prior to the expiration date customers are obligated to pay termination fees.

It makes sense to review your energy contracts even if you are currently within a contract term. Given the uncertainty in global fuel prices, locking a price for your future energy needs may be the best option for your business growth plans and budgeting concerns. You may be able to negotiate a lower price in exchange for a longer term or lock in a lower price for a future start date.

When would termination fees apply?

The strictest contracts from REPs have termination fees imposed anytime a contract is not fulfilled through its term. Even if a business owner sells its business or shuts its doors, it may be held responsible for any unused electricity. Termination fees vary by REP. Some prorate based upon the unused portion and remaining term while others have flat fees. In order to prevent termination fees every business owner must make sure they comply with the terms of their contract otherwise face the consequences of bad credit and large fines. If a business is sold, changes owners, or is closed termination fees may be avoided by notifying the REP with the appropriate paperwork.

What is an Electricity Swing Clause? What is "No Swing"? What is "Full Swing"?

Many electricity providers protect themselves from unpredictability in customer usage by adding a swing clause within their contracts. A swing clause protects a REP from usage above or below a certain estimated usage. For example, a business customer with an estimated usage of 1,000,000 kWh over 12 months and a 20% swing is able to use between 800,000 and 1,200,000 kWh throughout the 12 months without additional charges or fees. Swing clauses may be for monthly or annual usage amounts. No swing or 0% swing would imply penalties for anything other than the exact estimated usage. A full swing implies no limit to the amount of energy above or below the expected amount and therefore no penalties.

Should I lock in a price for as long as possible?

The total price you pay for energy is dependent upon your rate and the usage amount over a certain time interval. Locking yourself into a contract at any given price may or may not be the most beneficial solution for your energy needs. Given the uncertainty in electricity fuel costs (natural gas, coal, nuclear, wind, solar, etc) from year-to-year, only time can tell if a fixed contract is your best option. Natural Gas and Coal prices may increase in the future, but with increasing production from renewable sources the costs of energy from solar and wind power may decrease. If nuclear becomes a larger percentage of production then electricity costs may fall rapidly.

If your business can shift its own electricity demand to lower price time intervals (within the day, week, month, or year) then a more flexible contract option may save your business more over time. If your usage is dependent upon the demand for your own products, then locking yourself into a given usage amount may not be the best option. If you can pass through the production costs to your consumers then a variable contract may not impact your business as much as it does to others.

Each business is different. Each usage is different. Each business has unique needs and your energy needs are not only a cost component to your business, but also a critical strategic decision for its profitability and growth potential.

What are all these different kinds of electricity contracts? What is the difference between a Fixed, MCPE, and Block-Indexed Product? Which is right for me?

If long-term stability and budget control are important for you and your business, then a fixed rate product with its per kilowatt certainty may be your best option. A fixed-priced contract will hold the commodity price of the electricity constant over the contract term. Your final bill may change due to monthly usage differences, transmission and distribution charges, and/or taxes. The downside to a fixed-rate contract is your exposure to usage risks. You are paying a premium for the right to have a kilowatt price fixed for the term length.

If your usage is highly seasonal, your business has the ability to alter energy consumption, and/or you can pass through your production costs then a variable contract may be better. Variable contracts can be based upon different indexes (MCPE, Henry Hub Natural Gas Spot Prices, market blended value, etc). A MCPE (Market Clearing Price for Electricity) contract is a variable contract based upon the blended value of all the electricity generation sources in a region at a given time. An REP will charge your business the MCPE plus a retail adder (additional fee usually equal to $0.01 to $0.02 per kilowatt). The risk for any variable contract is a disruption in market capacity. If the principal base-load for an electrical region or zone undergoes a shock from either supply disruptions or increased demand then there is a potential for price spikes.

A block and index product allows businesses to take advantage of both the certainty from fixed contracts with the variability from an indexed product. A business customer purchases a block volume (base-load) amount of power based upon the minimum amount needed per month. Any consumption over that amount will depend upon the predetermined index. This may allow your business to reduce its weighted average costs for power.

Why use a broker rather than directly going to a REP? Why use iEnergy North America rather than multiple brokers?

Your Retail Electricity Provider is not trying to help you or your business save money. Each Retail Electricity Provider has a limited number of products and their own restrictions. Brokers can aggregate usage from multiple companies to provide each individual company a price better than one individually negotiated. Good brokers have the ability to match your business needs with the correct program from the REP who will best provide a solution to meet them. iEnergy North America has the experience of matching thousands of businesses with a unique energy solution and the expertise to understand how each business is different. iEnergy North America takes the time to turn your energy contracts into strategic advantages.