Evaluate Variable Energy Rates for Your Business’s Bottom Line
Natural gas de-regulation began with only a handful of states in the 1980’s. Ohio was a leader in this effort initially serving large industrial customers before ultimately extending to commercial and residential customers, as well. Today, an overwhelming majority of Ohio commercial and industrial users take advantage of a wide range of de-regulated pricing options. Most often, these are either a variable rate based on an energy index or a fixed-price set for an extended period of time.
The utilities continue to provide regulated rates for those customers that either can’t or choose not to take advantage of de-regulation. These rates are typically higher than what a business can secure through the new providers that have emerged through de-regulation.
Price Transparency in Commercial and Industrial Energy
Historically, the way variable energy rates were determined wasn’t transparent. Energy utilities and providers following this outdated practice tend to result in monthly variable rates that are way out of the range from where they could be. Curago works with de-regulated variable offerings that are very transparent. We typically align our energy contracts to a highly visible index point like the New York Mercantile Exchange (NYMEX) natural gas contract. The result is easy visibility into the most competitive pricing available. Customers should be aware of these best practices for variable rate differences as they establish their energy procurement strategies. Ignoring them can quickly result in overpaying for energy.
Ensuring Variable Energy Rates are Competitive
One of Curago Energy’s customers, a large Northeast Ohio company, found themselves in this situation. They had recently purchased a property and had not yet selected a supplier in the de-regulated marketplace. They were with a supplier who had been randomly assigned to them as part Dominion Energy Ohio’s tariffs. Their monthly variable rate of more than $5.70/Mcf was determined through a very non-transparent process that can be unfavorable to customers. At that time, the natural gas markets were at attractive levels and the customer could have gotten a monthly index price in the $3.00 to $3.25/MMBtu range with a transparently priced product tied to NYMEX.
They moved to a de-regulated product that generated an estimated savings of over $68,000 annually and over $205,000 over a 3-year term. So, by getting off of the unfavorable utility rate and allowing Curago to actively manage their energy services, this customer was able to cut almost a quarter of a million dollars out of their budget.
That’s a powerful benefit to working with energy procurement professionals who have a history of doing things “the right way.”