Know Your Options Before You Lock Into a Business Electric Contract
When paying electricity rates to run a business, it is simple to be burned by pricey utilities. Actually, the price of electricity has been noted as one of the leading problems that small business owners face, according to a survey recently conducted by the National Federation of Independent Business. This makes it vital to know what to search for when you are looking for a company to supply you with electrical power for your Texas business.
Here are some facts to think about when picking where to buy Texas business electricity. Fixed vs. Variable Rates – If you agree to a fixed rate, the per-unit price of electricity will not change for the entire contract term. There are a few exceptions to this rule however a fixed rate will keep your energy bills at a constant rate, as long as the amount of energy your business uses remains relatively the same each month. On the other hand, a variable rate means that cost per unit of electricity changes based on market conditions. At times a variable rate will give you lower costs, and other times it will be more expensive than a fixed rate.
Fixed vs. Variable Rates – A fixed rate, as the name suggests, means that the per-unit cost of electricity will not change for the duration of the contract term. There are a few exceptions to this rule, but for the most part a fixed rate will keep your energy costs consistent, provided your business does not vary much in its energy usage. With a variable rate, the price per unit of electricity fluctuates based on market conditions. A variable rate will at times yield lower prices, and at times will be priced higher than a fixed rate.
What this means is that you will be paying less than the market value for your electricity as your contract matures. However, if the market values fall, you will be trapped in a long-term contract and will have trouble trying to renegotiate a lower fixed rate.
If you are thinking about a short-term contract, then you may want to choose a variable rate. The pricing will fluctuate from month to month, but you are likely to get cheaper rates in the short term than you would with a fixed rate contract. As well, this gives you the capability to enter into a long-term contract in case electricity prices fall enough that it would be worthwhile for you to go for a fixed rate.
Contract Terms – Many providers of Texas business electricity offer month-to-month plans, mid-term contract terms of up to three years, and in some cases, even longer term contracts of three years or more. It’s important to choose the plan that best meets your needs, and to carefully review all facets of any written agreement. In particular, you should be aware that you may have to pay a cancellation fee if for any reason you terminate a contract before the full term is completed.
Environmental Responsibility – Finally, many Texas businesses decide to buy energy that has been produced from renewable resources such as solar energy, wind energy, geothermal energy as well as others. If you are worried about whether the electricity you buy is eco friendly, ask your electric supplier or look at the supplier’s Electricity Facts Label.
If you consider all these facts, you will be well informed when choosing what type of Texas business electricity meets your requirements. This will mean fewer burdens on your pocketbook, it will help you understand the terms of your plan, and use resources in a responsible manner.
Author: Jerry Dyess has been in the Texas Electricity business segment for the past 7 years and published many articles on Texas Electric news.
