Energy purchasing options vary according to a company's size, geographical location, energy usage and desire for a long or short term energy consumption strategy. Our consultants will help determine what your relative usage and size profile will be when shopping the energy markets for you and explain the product and pricing options to you in more detail.
Products for small business customers:
Variable price gas and electricity
In most markets customers can elect to allow their pricing to move up and down with the open market rate for energy, essentially following a pricing path very similar to that for energy supplied by the incumbent utility. This can be particularly attractive in some states where the public utility regulatory body provides for tax savings, usage credits, or built in pricing discounts to create additional incentives for customers to enter the competitive energy supply market. Some of SPI’s suppliers can offer additional discounts for customer loyalty including direct pricing discounts and promotional offers and savings on other non-energy services or products. Typically, variable pricing is offered on a month to month basis with no cancellation fees so there is no long term commitment, freeing the customer to move to other product and pricing options without penalty.
Fixed price gas and electricity
For firms that want to protect themselves against the historic and seemingly inevitable long term upward movement of energy prices, fixed pricing establishes a price for energy supply that remains unchanged for the duration of the agreement with the supplier. This option creates more budgetary certainty and protects against market volatility. For small commercial customers, fixed pricing is typically available for a commitment period of one to two years.
Products for commercial and industrial customers (medium and large industrial and institutional customers):
Companies that require budget certainty and cannot bear upward movements in energy pricing will select a fixed price pricing strategy. Typically the customer receives all of the operation's power needs at a pre-negotiated “fixed” price. This type of product is suitable for the vast majority of commercial and industrial companies. When you include the “Blend and Extend” option offered by some suppliers, this can be very attractive because in these cases the price may be renegotiable (if the market goes down) and the length of term extended. SPI Energy’s suppliers offer fixed price options as short as six months and up to 5 years in length.
Under index pricing, the customer pays the average of energy spot market settlements over the billing period, in effect riding the ups and downs of market pricing for energy. This is most suitable for companies that can manage power consumption, pass on the cost of electricity to their customers, or use a majority of their energy during off-peak hours when energy is cheaper. Over the long run, customers paying index pricing that don’t aggressively manage consumption patterns will likely pay a higher price for energy than those customers choosing a fixed price option.
Fixed Price Block with remainder at Index Pricing
For larger consumption customers willing to take some chance riding market index pricing, but who have concerns about letting 100 percent of their energy pricing ride on the index, or those who have mixed consumption patterns between several operations, a block-and-index combination can be an effective option. This offers the option of reducing costs for off-peak consumption activities, while mitigating the risk of variable pricing for peak-demand business activities. This strategy allows the customer to buy fixed price blocks over time and take advantage of a dollar cost averaging type of strategy for energy buys.
Index with Fixed Price Trigger
In this scenario a customer can ride index pricing with the option of locking in a price at a later time when pricing hits a predetermined threshold. This option provides a strategy for those willing to ride market pricing with an index price but also want to take advantage of any market dips to lock in a fixed contract price. Customers considering this option should be able to handle a moderate degree of upside pricing risk.