Strategies for Getting the Best Energy Supplier

If you have thought about your natural gas or electricity bill lately, then you may have heard that you can use another energy supplier rather than your local utility. How can you find these companies, what do they do and how do you decide which one to choose?

These energy suppliers buy and sell natural gas and electricity using the same pipes and wires that the utilities do. What makes them different from the utilities is how they provide this service to their customers.

It’s important to note that the right energy supplier will focus less on price and more on flexibility and service. Because natural gas is a commodity — like milk, flour, or gasoline — whose pricing is determined by the market, the rate of the gas itself does not vary much among providers. (Electricity prices sometimes vary more, particularly if you choose alternative or “green” energy sources.) This means that the gas price offered by a supplier on any given day is not a great indicator of its value to the consumer. Energy providers do, however, offer many unique features that distinguish them from utilities and from each other, such as fixed-price and variable contracts.

So, if multiple energy providers offer fixed price plans, and pricing is determined by the market, how can you tell which energy suppliers are better than the rest? After all, there are at least 130 alternative electricity and gas providers for non-residential customers in New York State alone, and more than 80 that cover the Consolidated Edison territory in New York City.

Here are three things to look for in an energy provider to help you make that choice:

1. An excellent reputation. There is a wide range in quality of service, so company reputation is critical. For starters, customers need to ask the tough questions to make sure energy companies are legitimate. Unfortunately, like all industries, the energy market has its share of fly-by-night operators and and horror stories. All things being equal, companies that have been in operation for many years usually have a good track record and are more likely to be legitimate, upstanding and well run.
2. Resources and know-how. An energy provider should have strong operational capacity and experience. Some providers offer fixed-rate contracts but may not manage them properly. For example, they may not have bought or hedged enough gas in anticipation of the cold weather. These providers then may pass along the costs associated with such poor planning and management to their customers. Also, some energy providers do not have the financial resources to properly service their customer base or the internal technical expertise necessary to manage a large portfolio.
3. Knowledgeable and responsive customer service. It’s important that a provider not only has strong market expertise, but also passes that knowledge along to its clients. In short, your energy provider should understand your business and use that understanding to your benefit. Are you getting expert advice on how to use gas efficiently, and whether and when to use fixed-price contracts? If you can’t get your energy provider to pick up the phone or visit the premises to answer questions, explain issues and help address energy needs, you are not getting the service that you deserve.
4. Technology and Sustainability. The energy market is evolving quickly as technology is transforming the way customers think about and use energy. Your energy provider should be keeping you informed and helping you take advantage of the latest tools and processes. Renewable energy is fast becoming the leading trend, as it is a better option for both the environment and your bottom line. Energy management systems are also becoming a popular way to track and monitor when and where energy is being used in your home and business. Your energy provider should have suggestions and options for both renewable energy plans and energy tracking technology.

How can you identify the right company? There are a number of independent sources available to the public that rate alternative energy providers and should be consulted before you sign anything.

The New York State Public Service Commission, for example, provides lots of useful information, including a list of questions you should ask. Their website also evaluates energy service companies based upon the number of complaints, called the “ESCO Residential Complaint Rate Scorecard.” Further, it allows for anyone to file a complaint regarding an energy company simply by clicking on the appropriate link.

Other states, including New Jersey and Massachusetts, make it easy to file complaints as well.

Non-government groups also review energy service companies’ performance. For example, the Better Business Bureau (BBB) has location-specific web pages offering this information.

Lastly, you should always take the time to visit your prospective AEP’s website and talk to customer service professionals to get a sense of their legitimacy and professionalism. Remember, you are not just buying energy, you are hiring service professionals. You should hold them to the highest standard.

Matthew Lanfear is the CEO of Great Eastern Energy. He brings more than 19 years of experience in the natural gas industry to the company. He began his career in 1994 within the National Fuel Gas System in upstate New York managing commercial accounts. He spent the next four years with an international energy company as director of northeast operations. After the sale of the company in 1998, he became an original member of a marketing company in the northeast and the Midwest. He joined Great Eastern as its CEO in 2000.