by Gabriel Canal, Senior Energy Consultant
If you manage multiple properties either commercial or Multi-family, this is for you! If you are new to multifamily property management and have questions about setting up electricity agreements check out Understanding your Multifamily Electricity Agreement (CAA/CSA).
Since deregulation started in Texas in 2002, business owners have tried to figure out whether they should go directly to an electricity provider to manage their portfolios or partner with an energy broker. Electricity brokerages are still a relatively new concept. Along the way there have been some bad examples of how this process is intended to work. Brokers who do not conduct business with honesty and integrity are largely to blame for this bad reputation. As a business owner there are steps you can take to ensure that you find the right partner.
1. Make the energy portfolio a priority among leadership.
Many businesses make the mistake of not allocating the resources to effectively manage their electricity portfolio. Because of this, they always seem to be a step behind which only adds to the stress. There is not enough time in the day, things must be rushed, all parties involved are working under the pressure or trying to meet a deadline. It is vital that the energy agreements for your properties are a topic of discussion as you buy, sell and maintain them. The leadership team of your company should be involved in the process of establishing a solid foundation for how you will go about managing this part of your business. This can take a little time up front, but it is a necessary step that ensures smooth, efficient sailing going forward.
2. Appoint a contact person within your company that you trust to make decisions.
Sometimes the task of shopping for electricity rates for a new acquisition or a renewal is assigned to whomever has a little time to go online and do a search. This becomes very inefficient as the information needs to pass through several people. There is a lot of back and forth on who wants what information. Most likely the person assigned to this task has never done it before and is limited at best in their knowledge of the electricity market. Appointing a point of contact will make a world of difference. Once this contact person within your company has been appointed, the other leaders are free to work on their tasks as they normally would. You want this person to be able to make decisions on behalf of the company or bring the information directly to a board if necessary. Now you have created a single line of communication for any outside contacts regarding all thing’s electricity/natural gas. No one within your company must wonder whether these tasks are being handled. You also allow whomever you contact, whether a provider or broker, to know that they are communicating with a qualified person from your company.
3. Is it worth the time it will take to establish a relationship with a Broker?
Once you have a contact within your company that will handle your electricity accounts, you want to work on who you are going to partner with to procure pricing, negotiate contract terms, special provisions and general management of the accounts. A good broker will operate with your company’s best interests in mind. They will not only advise you on a quality plan of action, but will assist with customer service, billing issues and anything else that comes up. The time invested upfront will be well worth it.
4. Honesty and Integrity- Find someone you can trust.
If you are going to rely on someone to be your expert on a topic, you want to be sure that they not only have the experience and knowledge to do so, but also operate with honesty and integrity. It is important to do your due diligence. Check out the company website, ask questions and check out their BBB rating. Sometimes you just must trust your instinct. Transparency is key. A broker should always be willing to provide you any information you request in a clear and timely manner. At Eisenbach Consulting, we operate by 2 core principles- People matter most and always do the right thing. This is evident in the work that we do and how we communicate with our clients.
5. Do you want a partner or a pricing tool?
When you are choosing an energy broker to partner with, take your time to do your research and get comfortable with the company. Just like with any other decision you make within your company; you want to know with whom you are working. Once you make that decision, do yourself a favor and allow them to be your expert. When you begin the cat and mouse game of never trusting anyone and pitting companies against each other (your company VS brokers VS electricity providers) no one wins. Many times, customers want a broker to be honest and reliable, but they will not offer the same to the broker with whom they are working. This can be unsettling for everyone and usually no one wins, and everyone is frustrated. Of course, you do your due diligence and not blindly follow. Allowing a quality broker to work alongside you as a partner to reach a decision that benefits your company, will not only save you time and money, but you will also have a much better experience.
6. Is there a cost associated with using a broker?
Brokers have varying ways of being compensated. The most common ways are as an upfront hourly charge paid by the customer to manage the procurement RFP process or by having the winning provider pay the broker a small residual fee over the life of the contract. Providers save the marketing dollars they would have spent to acquire a new customer. When the latter option is chosen, there are no out of pocket costs to the customer and typically the broker will continue to manage the agreement over the life of the contract as the provider pays them. Providers pick and choose carefully which brokers with whom they want to work. A quality broker brings quality potential clients which can be expensive for a company to acquire through traditional marketing.
7. Wait, shouldn’t I just go straight to the provider for the best rates?
Not necessarily. There are currently about 70 retail electric providers in Texas alone. In order to go about this process on your own, you would need to know which ones to contact- Who is new to the market? Who is experienced? Who has a good online interface? Do they allow credit card payments? You would need to individually vet each provider. The Texas electricity market is incredibly competitive. This is great for the consumer if handled properly. Each provider has unique hedging practices that change over time meaning that one single provider will not always be the best option when you need to renew your portfolio or acquire a new property. Eisenbach Consulting is amongst the most established energy broker shops in the country. We have long standing relationships with many providers across the USA. From this relationship providers know that when we bring a customer account to them to bid, we are also going to be bidding the account with their other top providers in that market. Out of the gate, we typically see lower rates for the simple fact that the providers know they are going to be in a competitive situation. This results in particularly good offers for the customer. From the feedback our clients have given us, contacting a provider directly for a multifamily or property management company account, is much more time consuming and confusing. We request and present pricing to you in a clear apples to apples format with all the “gotcha charges” or hidden fees already removed.
8. Managing your electricity portfolio
As a broker, we can manage your accounts on a micro and a macro level. Anything from reviewing bills to ensuring your long-term contracts align with each property’s hold/sell goals. Is your company overall in a buying, holding or selling position? How much risk do you want? These are all things to be considered when looking at your portfolio.
Here are examples of just a few things we do for our large multifamily and property management clients.
- RFPs-pricing, comparisons, negotiating, research
- Contract review-changes, redlines, additions
- Property acquisition- take over current agreements or start a new one?
- Invoice review- corrections, re issues, update billing information
- Regulated Markets-Utility audits, bill review
- Renewals
9. Other Services
Ideally, you will find a partner that can provide customized solutions for all your energy needs. As a full-service energy consulting firm, we are always looking for avenues to save you money. We can help you with upgrading lighting, tax exemption studies, power factor correction, or solar. Our value comes in the form of knowledge, reliability, honesty and integrity.
This content was created by Gabriel Canal, Senior Energy Consultant at Eisenbach Consulting, LLC, the parent company of ElectricChoice.com. He can be reached at gabriel.canal@eisenbachconsulting.com or 903-705-7769.
