Buying electricity for a business in Texas has become quite complicated. With over a 100 providers in the market, and being one of the most volatile commodities on the planet, most businesses make terrible buying decision when it comes to electricity. Here are few of the most commonly made mistakes:
1. Failure to Properly Profile Your Business – Profiling your business consists of reviewing your historical usage pattern, as well as considering how your usage pattern may fluctuate in the future. You must ask yourself, what if we add or delete a shift? Is there any chance we may downsize or grow? Is there a possibility of adding more equipment, or shutting down any equipment that uses electricity? The bottom-line is that you must have a good sense of what your consumption pattern will look like in the future so that you can enter a contract that does not contain penalties for a fluctuation outside the “swing” which is allowed in the contract that you enter.
2. Failure to Define Your Price Targets in Advance – Buying on emotion, and in a reactive manner often results in poor decision-making. However, if you develop a strategy in advance, you can remove emotion from equation, and simply execute a plan that has been established in a proactive manner. Your plan should give you price targets on the high and low side, and include certain time frames to guide the process. If you know for a fact that you would be ready to lock in as soon as you get to a savings of 15%, then this makes the process very easy. Conversely, in a rising market, you may determine that if your costs rose any more than 10%, then you could not be competitive. Therefore you would want to set a hard stop at 10%, and if the market rises to that point, there is no discussion. You simply execute the plan that says MUST limit any cost increase to 10% or less.
3. MOST IMPORTANTLY! Failure to Automatically Track Renewal Rates – The absolute biggest mistake that businesses make is they fail to track their renewal rate. The reason so few people do this is because it is very time consuming to look up natural gas prices everyday, and make the calculations to determine what that means to you in terms of an electricity renewal rate. Live Energy has a tool called the Live Energy Portal, which allows businesses to do this automatically.
These are only a few of the common mistakes that businesses make in purchasing commercial electricity. The good news is that there are simple ways to ensure that you do not make these common mistakes. For more information about how Live Energy can help you bullet proof your process and avoid making these common mistakes, call us today to speak with a certified Energy Advisor.