August 17, 2007 admin

Waiting to see what the market will do?


Waiting on the market

For those companies who are waiting to see what the market will do before signing on a fixed term contract there are several things to ask yourself. Do you understand why you would want to be on a fixed term electric contract in the first place?

Energy terms can be like buying insurance

Being on a fixed term energy contract is like buying insurance. You will pay a slightly higher rate but this saves you against any price spikes. If you are off contract you are usually paying a higher premium electric rate for your company. It only takes about a month staying on a premium rate to eat up any savings you would have by waiting for the rates to fall. If rates increase then your business is really in a fix.

Find an electric wholesaler that prices in MCPE

A better solution is to go ahead and work with a solid company that deals with MCPE pricing. This is basically a low variable electricity rate. It is not offered to residential customers but businesses can get on it and pay between 6 – 7 cents kwh which is what it has averaged over the last 2 years.

Converting MCPE rates to fixed

At anytime in the term of this variable rate you can convert a percentage or all of it to a fixed electric rate. Many people keep a 50% – 50% blend and others love it so much that they have their entire usage on it and never convert over. I am a believer in MCPE (Market Clearing Price for Energy) and I have found quite a few others that are on board as well. Large indusrtial and commercial facilities see enough money come to the bottom line to see the benefits.

MCPE

Looking at MCPE’s track record it is worth taking a closer look at. Basically what it comprises is a settlement index created by ERCOT that manages the grid. Electric Companies in Texas that no longer need energy they have bought or need more can settle what is left on this market. It is a function of supply and demand and the price changes every 15 minutes instead of seconds on the stock exchanges.

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About the Author

admin Donny started ElectricityBid.com back in 2007 from his parents basement and has since married his wife Melody and had three sons, John Adam (7) and Noah (4) and our new 20 month old son. He enjoys tech related things, softball, kickboxing, going to the gym, excursions and activities together with his wife Melody. Our service allows you to shop and compare commercial and residential electric rates and providers. Would you take the time today to try our service and see how you like it. Thank you! and God Bless You!

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