In the wake of energy deregulation, the energy consulting industry can appear to be a crowded and chaotic field. It is estimated that there are more than 2,200 energy consulting firms in just the Mid-Atlantic Region alone, comprising various levels of expertise and a broad range of ethics.
Utility commissions across all deregulated states have taken measures to enforce licensing requirements and punish bad behavior via hefty fines and even the revocation of operating licenses. Even in this better-regulated environment, however, commercial energy users of all sizes continue to be bombarded with energy sales calls. This may cause you to simply say “NO” to all of them, and that leaves you stuck with your current broker, which may not be the best business decision.
So how do you separate the sheep from the goats? How can you identify those consultants (brokers) who merit your consideration?
Are They a Legitimate Broker?
The vetting process is actually pretty simple:
Ask for the caller’s name and the company they are calling from, along with their contact information. If they are hesitant and without conviction that is a definite red flag. A lot of suppliers and brokerage firms use call centers, and those who are manning the phones are neither experts nor even an employee of the company.
If they are indeed a licensed broker, ask if they are licensed in your state. In most states all energy brokers, consultants and suppliers must be licensed with the utility commission. You can always check your state’s utility commission website for a list of all licensed companies.
Check their website while you’re on the phone. See if they have testimonials, case studies and other articles and insights. If they don’t have a website, don’t bother.
See if they have a corporate LinkedIn page and a Facebook page. Check the caller’s individual LinkedIn profile to ascertain his level of experience and expertise.
Are They Better than Your Current Broker?
OK, so they are a licensed broker, but will they actually be more effective than your current broker? Here are four questions you can ask to make this determination:
What is your bidding process? Do they have a proven reverse auction process that forces suppliers to compete head-to-head for your business?
How many suppliers will compete for my contract? You never know which supplier will be the low bidder in any given auction, so you must include every viable supplier in the process.,
Will I see every price available in the market? If you don’t see every price for every contract type and term, how do you know you are seeing the lowest possible price?
Is this a good time to buy? Of all the factors that affect energy pricing, none is more important than timing. For example, current electricity prices are holding at 5-year lows, and the “Futures” pricing curves are highly favorable. If your broker has not alerted you to this, you are missing a historic buying opportunity. Does the Broker/Consultant have the knowledge and experience to understand the complex factors that drive the market? Do they use this understanding to minimize your risk and maximize your opportunities?
What is your contracting process? This step – often overlooked – can be critical. Every Supplier has a different contract, and regulatory issues can create unpleasant surprises. An experienced Broker or Consultant can help you avoid contracting pitfalls and regulatory landmines.
How do you develop the Request for Pricing (RFP)? Expect your Broker/Consultant to understand your energy strategy and goals fully, and to craft an RFP that explains ALL your requirements to the Suppliers clearly – e.g., multiple term lengths, bandwidth and swing tolerance, green-power; pass-through of Capacity and Transmission charges if strategic, and the terms for buying/selling overage/underage for natural gas.
What ongoing support do you provide? To ensure that you are being billed correctly from both the Supplier and utility, bill audits must be conducted throughout the term of the contract, with your Broker/Consultant taking charge when there is an issue. Also, will they provide budgeting support and ongoing market intelligence. Lastly what additional value do they add to your organization such as energy management and monitoring capabilities, lighting, and other energy reduction expertise.