Energy choice markets require business customers to become smarter energy purchasers. Many businesses have elected to use electricity brokers and consultants to assist them with their energy contract decisions. Whether they elect to do it themselves or work with a consultant, it is important for business owners to make sure that the person handling their energy decisions has a good understanding of electricity rate markets which will result in smart forward pricing decisions.
Forward pricing is the ability for customers to “lock-in” a fixed rate at one date, but to have that rate start at a specific date in the future. For example, in August a customer can lock in a 12 month fixed electric rate that is set to begin in December when the customer’s current contract will come to an end.
Forward pricing gives the customer the flexibility to watch electricity prices for several weeks, or even months prior to their contract expiring. Instead of businesses waiting until their contracts expire and then being at the mercy of market prices, forward pricing allows these businesses to take advantage of market drops when they occur.
Good energy brokers will keep an eye on prices several months before their client’s contract is set to expire. Electricity prices have to be locked in quickly, so having a good relationship with your electricity broker is important. Quick communication can result in tens of thousands of saved dollars in energy expenditure.