A common question we get asked as energy consultants is, “When is the best time of year to shop for gas or electric rates?” The short answer is there is no “best time”, but as experts in energy management there are certain factors we use to best advise our clients who are looking into new plans or considering to lock in their current rates. Factors such as the weather and economy play a role in stabilizing or disrupting the prices of gas and electric rates. Even during spring and fall when many suppliers suggest plans should be set, the market can take a turn and disturb what could have been a safe time for entering into a fixed plan.
Before you begin thinking about new pricing options, make sure to know the details about your current arrangement. Are you receiving supply through your utility or a 3rd party supplier? Are you on a month-to-month agreement or in a specified contract with term dates? Are you on a fixed or variable plan? What is your rate per kWh (electric) or Dth (natural gas)?
Next decide what are your company goals moving forward. Depending on the financial impact that energy plays on your budget, the decisions can be different for each company and even change from year to year. Are you open to a variable rate where the price may fluctuate with the highs and lows of the market throughout the year or do you want to have more price certainty and lock in a fixed rate that is more stable over time? When considering these questions, it’s helpful to evaluate how your energy costs fare throughout the year compared to the utility and other market options in order to thoroughly understand your energy position. Knowing this background information with help you make smarter purchasing decisions moving forward.
If your company is unable to withstand the highs and lows in the market, looking into fixed rates is usually most sensible. Locking in a fixed rate protects customers from the volatility associated with the energy market. Customers pay a small premium for a fixed rate contract, however this type of agreement offers assurance and puts a ceiling on the price if the market were to rise during the term of the contract. With that being said, regardless of when your current contracts expire, you should be well informed and ready to lock in future pricing options during low periods in the market. A new contract or contract extension, can be made months, even years (depending on the supplier and other business details) before a contract expires.
Each customer’s needs are different which makes it difficult to pin point the best time to look at pricing. However, when working with Power Management we will take the time to understand your specific energy needs and ensure you are updated on market conditions. No matter what time of year, we help to guide you, explaining the advantages and disadvantages of different pricing scenarios as they arise.