Energy markets across America are fundamentally changing. More renewables, new laws and regulations, new policies, a changing economic landscape, geopolitical factors, and heightened climate awareness are just a few parts of the story today. After the natural gas boom of 2008, energy costs steadily decreased year over year, with intermittent periods of increased volatility related to weather. In general, a decline in energy costs due to cheap, abundant fuel sources more than offset any other cost components that may have been included in commercial energy rates, with energy costs accounting for about half to two-thirds of a typical “fully-bundled” energy rate during this period. This led to many commercial energy buyers locking in long term energy supply contracts to take advantage of the market conditions, with brokers/consultants advising them to do so because the market was poised to increase just around the corner, saying things like “lock in now before the market jumps” without providing any real context, and simply selling on the contract over contract savings, which did exist in many cases. Nobody really wants to talk about the fact that if there was a significant contract over contract savings opportunity, it typically meant you were overpaying for your previous contract, as you locked in a rate as the market was in free-fall.
Nobody really paid too close of attention to increased broker fees or the other components that were beginning to bubble up, as these “lower” rates kept everybody happy, and allowed brokers to continue to increase their hidden fees in rates while still showing savings.
Stop me if this sounds familiar…
A broker set you up with a contract at a rate that they said was lower than the utility’s for a couple of years and you were pleased with the savings so you signed and didn’t ask too many questions..… around the time when that contract was expiring a few years later, they came back and presented you with a simple “fully-bundled” rate and contract, said they “shopped the market” for you, and promised you savings over the next 3 or 4 years much the same way they did on the first go-round, you signed without asking too many questions as you were pleased with the savings, your broker went away for a few years then came back and repeated the process… each time showing you contract-over-contract savings and telling you that the market is going to go up so this is to your benefit. Savings, savings, savings!! Lock in now, the market is going up!!
In reality, here is what was happening: Your broker was reaching out one time to one or two suppliers right around the end of your agreement on some arbitrary day, getting the rates from the suppliers and luckily realizing the rates were much lower than your current rate. They marked up those rates as much as they could with their fees, and were still able to sell you on the savings. AH-HAH an easy sell! Everybody likes to save money! It didn’t really matter that they were increasing fees, not paying attention to contract terminology or doing any real analysis, not really shopping the deal, and not really worrying about doing any real pricing analysis except for right before the contract was expiring, because you were happy with the lower rates! It was a perfect storm caused by falling energy markets that allowed brokers to increase their fees while still showing you savings! It didn’t matter that the product may not have been best for you, that you were overpaying, or that they were not paying much attention to what was happening in the markets, or that their fees were being increased to astronomical levels.
Set it and forget it!! Talk to you in a few years!!
Fast forward to today.. Most larger energy consumers are locked into some sort of “fixed-rate” energy contract for a couple more years. Guess what has happened?? Certain pricing components have increased, and what has “worked” in the past will not work in the future. The gravy train for traditional energy brokers is coming to an end, and we welcome it! Gone are the days of falling energy costs off-setting all the other “fluff” and fees in energy rates. The market has changed, and the way you buy energy must adapt.
It is no longer enough to work with an energy broker who does things the “old fashioned” way, reaching out to a couple of suppliers right around the end of your contract, increasing their fees, and advising you to lock in a “fully-bundled” rate with no real explanation or contract analysis. As contract over contract savings opportunities are not as prevalent in today’s market, energy buyers are starting to pay much closer attention to things that frankly should have been scrutinized years ago.
Enter Zentility, a supplier-agnostic, low-fee software created by energy industry experts that utilizes technology to ensure that you are making the best possible energy buying decisions, under any market conditions. We use data-driven analytics to automatically monitor the market, through our supplier marketplace of 30+ Retail Energy Providers, regardless of your contract end date, to find the best possible energy buying time and strategy for you. Even if they wanted to, this is simply impossible for a traditional energy broker to do.
Zentility’s technology, transparency, and expertise have led to more effective energy supply strategies for our clients than any traditional broker could possibly develop and implement.
Gone are the days of paper contracts, spreadsheets, unorganized data, and hand-shake deals with traditional brokers!
It is time to get with the times!
Director, Business Development; Zentility Inc.
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