Energy options can benefit local businesses, reduce overall price risk and maximize budget - by Richard Rathvon

Richard Rathvon, Con Edison Solutions

Unlike in many other states, businesses in New York have the opportunity to exercise significant control over their energy spending – and thereby reduce overall price risk and maximize budget certainty.   

And this is a valuable opportunity, considering the price volatility in today’s energy market.

New York State’s energy marketplace has been unbundled and open to competition since the 1990s.  Today, more than 100 suppliers operate in the New York City area alone.

That means that when it comes to a business’ electricity supply needs, a customer need not accept the default supply offer from the local utility.

While utilities still deliver electricity to end-users, a utility is only permitted to offer electricity supply on the basis of a basic standard product and a monthly variable price.

The best way for a business to capitalize upon its electricity supply options is to work with a retail electricity supplier, also known as an energy service company (ESCO).

While the benefits can be significant, businesses should consider many factors when selecting an ESCO.

For example, a qualified ESCO will customize an energy-use plan depending on the type of energy product and term best fitting a business’ needs and objectives, as well as current market conditions. Customers should remember that the price of supply can be affected by such variables as weather, demand on the grid, and regulatory and environmental requirements.

Owners should ideally partner with an ESCO that is best equipped to align itself with the customer’s financial goals and corporate values.

For example, a supply plan could be set at a fixed or market adjustable price, for a short or long-term period, and through conventional or renewable sources, such as wind and solar.

Businesses should choose an ESCO that has a good reputation, is stable, and is financially sound.  The transaction process should be straightforward, with contracts that are easy to understand.  A good ESCO will make the options easy for the customer to understand.

Plus, a good ESCO will need to know whether a business is more focused on managing its budget predictability or maximizing cost reduction opportunities. Smart customers need to be wary of extra fees for enrolling, switching or cancelling an agreement.  They should be aware of various obligations and restrictions on both sides of the contract.

An effective ESCO needs to be thoroughly aware of a business’ energy usage.  For example, is most energy consumption attributable to heating, cooling, lighting, refrigeration or other uses? When does the business need the most energy?  What hours is the business open?

While the New York market offers a choice of many well-qualified and reputable ESCOs, here is an example of an end-user with whom our firm worked – and that was able to find a good partnership with its supplier:

Led by president Donna Williams, Field Goods is a subscription food delivery service based in Athens in upstate Greene County.  It brings locally farmed fresh fruits and vegetables to its workplace- and community-based customers each week.

Field Goods recently expanded into an 18,000 s/f warehouse that includes 4,000 s/f of refrigeration.

Weather influences her produce costs, and gasoline price affects her transportation costs. But Williams must also monitor a third cost factor: the price of energy required to run her operations. She pays careful attention to the refrigeration unit, which runs around the clock.  The fuel cost required to run the refrigerator is subject to the whims of a constantly fluctuating market.   

“We’re rapidly growing,” she said. “So price stability is critical. My energy provider needs to offer me the right price, while also understanding my business and its needs. I also wanted a provider who shared my company’s values, because this makes for a stronger partnership.”

The relationship is strong. Both companies are determined to advance green initiatives and are looking at ways to enhance Field Goods’ commitment to sustainability.  And while we sell her energy, our employees also buy produce from her firm.

This is not a unique example.  N.Y.’s energy marketplace is diverse and highly competitive, with many outstanding companies seeking to help businesses manage their energy requirements.  There are countless opportunities to find an ESCO that is in step with your organization’s needs and culture. It makes sense to find one, and to start realizing the benefits.

Richard Rathvon is a vice president, retail commodity services at Con Edison Solutions, Valhalla, N.Y.