Electricity Contracts – Good or Bad?

I wanted to take a moment and address a common misconception about energy contracts being a  bad thing as it pertains to signing up with an energy broker.

Many small business owners seem to think that only the energy suppliers that offer no contracts  are worth looking at.  Based on our experience we disagree.

First,  I’d like to point out that when you look at medium to large businesses it’s the total complete opposite;  these types of companies will only do business if there is a defined legal contract outlining exactly the terms and price.

If you are a small business owner and have been told or feel that contracts are bad please consider the following:

-No contract means there is no recourse and no way to challenge a price increase.

-The “no contract” suppliers will typically charge a higher rate because they have to price in the risk of you leaving at anytime.

-No contract type agreements often utilize an “introductory rate” which means that when you’re not paying attention the rate will increase.

-If you are concerned that the market will move down or rates could decrease leaving you stuck in your current contract you can keep your term to 2 years or less.  In most states like CT the utility has the same rate during the entire calendar year.  If you enter into a short term contract below the utility rate it’s impossible for you not to save money or get into a bad situation.

In our experience the businesses we see that pay too much for their electricity are almost always with a “no contract” supplier.   In many instances they are paying as much as 50% over the current utility rate, often due to expiration of introductory rates, random rate increases, or “rebate” type incentive gimmicks.

You wouldn’t buy a car, if a dealer told you that your interest rate is not guaranteed to stay the same, then why do it for your electric bill.

Our recommendation is always to find the lowest overall total cost and have this be defined clearly in a legal agreement – a contract.