Electricity Providers. They're all the same, right?


I've been working for an energy broker for just less than a year now, and I've learned a lot. The most surprising thing I learned is that not all electricity providers do business the same way.

 

In a nutshell, there's two kinds of electricity companies: Tier 1 companies who have millions in assets and contracts to buy energy for six months to many years in advance, and then there's everyone else.

 

I won't mention company names in this article, but many of the companies who pay big money to have their rates listed on powertochoose.org are not companies you'd want to work with. Why?

 

They buy their electricity every morning in the spot market, just in time to let you use it. It's risky, their profit margins can be much higher if they know what they're doing, but their business model is just one natural disaster away from closure. The first big storm to hit the Gulf coast that shuts down natural gas refineries for even a few days will put these companies out of business.

 

Why do they go out of business? Because spot rates for electricity go through the roof after a massive storm hits the Gulf coast, and we get 80% of our electricity from natural gas. When these companies must pay far more for electricity than you have contracted with them, they close their doors and you're stuck with a much higher rate until you switch to another provider.

 

This is why it's so important to do your research and find a solid energy company with the assets to purchase electricity contracts that weather storms and provide customers with energy in good times and bad.

 

Want to know if your provider is a Tier 1 company or one of the many flakey energy companies out there? Send me a private message. I'm happy to tell you what your provider may never divulge to you. Moreover, if you're paying more than you should be for electricity, I can help you find a better rate or even help you renegotiate with your current provider in mid contract, believe it or not.

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Comment by Randall Neighbour on March 9, 2011 at 9:18am
Nancy, it's great to meet you online here. I look forward to meeting you in person one day as well.

InHouston
Comment by Nancy Johnson on March 8, 2011 at 11:13pm
Interesting... The fact is, we don't even need a major storm or hurricane... In fact there were several companies who went out of business last month with the rolling black outs we experienced! I also am a rep for a debt free company, one of the largest, that is able to hedge their prices based on the volume we do and by locking in our prices.

 

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