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Since the late 1990’s, commercial and industrial electricity users have enjoyed the freedom of choosing their own supplier. But, rate cap programs implemented by state utility commissions held utility rates below the true costs in the open market. So, electric generation suppliers could not compete against the electric utility’s basic default service rates and the need to buy from anyone other than the utility never materialized. But, as these rate cap programs have expired, electricity users have found themselves subject to price increases, and the services offered by direct suppliers began to make economic sense.

Some commercial and industrial electricity users have begun to choose their own supplier. But what does choosing your own supplier mean? Delivering electricity to your facility involves 3 main components:

  • Generation of the actual physical commodity at a power plant.
  • The transmission of the electricity from the power plant via high voltage towers to your local electric utility company.
  • Distribution of the electricity through your local utility system to your building or plant.

In contracting for your own supply, rather than buying from the utility, a third-party supplier will bundle together the generation and transmission charges and sell the electricity to you at your electric utility’s interconnection with the wholesale grid. From there your local utility redelivers the electric to your facility. What typically was a single purchase from the electric utility has now been split into 2 parts; the generation portion, and the distribution portion, those fees paid to the electric utility for use of their wires and meters, etc… By purchasing the generation directly from a supplier at rates below the utility’s price-to-compare, many companies have saved money versus buying default service from the electric utility. And these programs are mandated by state utility commissions, and endorsed by local electric utility companies. In fact, the utilities guarantee they will deliver the electricity to your facility, and there is no fear of retribution on the part of the electric utilities.

Different electric utilities have their own pricing methodology, but most utilize an auction process where pricing is established for a quarterly or annual basis. These are prices that are regulated by the state utility commission and are basically static in their approach. Through the use of a third-party supplier, they are able to offer a great variety of pricing options that your utility just can’t offer. Pricing examples include:

  • Fixed prices at term lengths you choose.
  • Variable monthly prices based upon the wholesale grid market.
  • Or some combination of the two above, see there is no limitation on what you can contract for on your own through a direct supplier.

Contact Us today for a free account analysis to determine what pricing options you’ve been missing out on, and how you can take control of your electricity expenses.