Electricity: Be strategic about contract negotiations

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By Ben Hall, Founder of OverVIEW Consulting, Inc

When’s the last time you reviewed your commercial electricity contract? In order to enjoy substantial savings, it is critical to understand when to negotiate a new contract and what to do when that contract is up.

For example, if the initial contract ended, you may be paying a holdover rate – a placeholder rate that takes effect following the supply contract’s initial term with an energy supplier. This puts you at the mercy of a variable rate which changes at the discretion of the provider based on market conditions.

It is important to note that in recent year’s winter electricity rates in several New England markets have spiked in some cases over 18 cents per kilowatt hour. Peak season, typically November to March, is no time to be in long-term contract negotiations with your electricity supplier.

As September approaches, it is best to consider negotiating a short-term contract to bridge the cold winter season. In the spring, you can then work to implement a long term contract of 12, 24 or 36 months. This can yield rates that are 30-40% lower than peak season.

Being flexible with the market and strategic about your electricity contract, you have a better opportunity to pick a plan when rates are the lowest.

Founded in 2005, OverVIEW specializes in reducing indirect operating expenses. On average, indirect operating expenses can equal 35% of total revenues, and represent a significant opportunity for savings.

CMEA members are invited to contact Ben at 401.640.4514, and be sure to tell him you are a CMEA member for the discount! Visit www.overviewconsulting.com for additional information and testimonials.