The short answer? Yes. When it comes to managing your business’s operating expenses, energy costs are often a major line item. Not only is it possible to negotiate your commercial energy contract, but doing so can lead to more budget certainty and favorable terms, especially when you work directly with a supplier. Here’s how you can take control of your energy costs and why negotiating your contract directly can make a big difference.
Why Negotiate Directly with a Supplier?
- Leveraging a Collaborative Approach: While brokers play an important role—especially if you’re short on time or prefer a hands-off approach—negotiating directly with a supplier can cut down on extra charges and secure a lower price per kW.
- More Transparency: Working directly with suppliers gives you a clear view of the pricing structure, contract terms, and any incentives available.
- Customized Solutions: Direct negotiation allows you to tailor your contract to your business’s unique energy usage patterns and operational needs. Say you’re looking for cogeneration or solar (or maybe both!), you can bundle services based on your needs and business goals.
How Negotiating Your Contract Saves Money
- Better Terms: Direct negotiation puts you in the driver’s seat to secure flexible contract lengths, favorable payment terms, and exit clauses that protect your business from market fluctuations.
- Avoid Hidden Fees: By dealing directly with the supplier, you can ensure you’re only paying for what you need. Your supplier will provide the best offer and the most competitive rates.
Key Strategies for Successful Negotiation
- Know Your Usage: Analyze your energy bills from your current supplier or utility to understand your consumption patterns. Suppliers are more likely to offer better rates if you demonstrate consistent or high-volume usage.
- Negotiate Beyond Price: Don’t just focus on the rate. Discuss contract length, early termination fees, and flexibility to ensure the contract meets your business’s needs.
- Know What You’re Looking For: Another way to save money is by negotiating the type of contract that best fits your business’s needs. You can choose between index, variable, and fixed-rate contracts, each offering unique advantages depending on your risk tolerance and market conditions. For example, a fixed-rate contract provides price stability and predictability, while a variable-rate contract may allow you to benefit from market dips.
- Pick Your Start Date: You can often negotiate your contract’s start date to align with favorable market pricing or seasonal trends in your geographic area. Note: be mindful of any termination terms in your contract with your current supplier.
What Can’t Be Negotiated?
While you can negotiate many aspects of your contract, some components—like taxes and transmission charges—are set by regulators and not open to negotiation. Focus on the elements you can control, such as your per kW rate, contract type and length, and service terms.
What’s Next?
Want more control over your energy strategy? Talk to our Energy Experts to see how direct negotiation can benefit your bottom line—and help ensure your contract works for your business, not just the market. Let’s get started.
