The original purpose of aggregation groups was to get different energy suppliers to competitively bid against each other to provide the group with the lowest rate. However, in today’s energy climate, it doesn’t always work out the best for every participant in the pool. Here are some of the pros and cons of energy aggregation.
- Group administrators buy energy in bulk, so you could achieve savings you may not have been able to get on your own. There is a perception that all members benefit equally.
- You are part of a large group so you feel comfortable, and it doesn’t require expertise in the energy markets. There is a perception of strength in numbers.
- Aggregation does not always yield a more favorable price: The final contracted rate may be higher because of the inherent constraints of working with so many different variables in a group buy.
- Lack of Control: The group administrators choose the energy supplier, and make the final decision, not you.
- Less Competition: Because of the complexity of the large deals, energy aggregation is limited to fewer providers. This decreases the amount of competition.
- Less Flexibility: You are obligated to accept the group rate and term with no negotiation and few options, even when a lower rate or better term could be available to you outside the pool.
Beyond Aggregation? Texzon’s KiloSmart™ Program.
The game is changing. Today’s volatile energy markets are like the stock market, with prices changing hourly. In this climate it is challenging enough to manage energy procurement for one entity without leaving money on the table. Aggregation makes that job even more difficult, especially when the usage volume of each individual participant can vary greatly.
That’s why many of our customers who formerly participated in aggregation groups have found increased flexibility and bigger savings with Texzon. By implementing our strategic plan of staying ahead of the market, getting multiple competitive bids, and making informed, quick decisions when the market dips, Texzon customers are able to strengthen their position, limit risk and save money.
How Texzon’s KiloSmart™ Program works:
- Develop a procurement strategy. The unique size and shape of your load, current contract terms and future budgetary needs are all taken into account in developing a procurement strategy.
- Research the market. Texzon calls upon a multitude of sources to ascertain the state of the energy market, the latest pricing trends and important legislative or regulatory developments. These all help determine the best time to buy.
- Negotiate a Strike Price. Once a strategy is established, Texzon leverages its long-term relationships with multiple providers, conducting an internal RFP. With several suppliers competing for your usage, the result is a negotiated target price.
- Make informed quick decisions. When the agreed-upon and validated strike price is reached, a buy order can be initiated, assuring the customer that the timing of the buy, the per kWh rate and length of term all meet their exact criteria.
- Provide ongoing market intelligence. Texzon constantly monitors the energy markets, keeping the customer informed of trends or developments that could affect their energy program, and making recommendations on actions they should take.
There are over 300 electricity providers in the U.S., but only one Texzon Utilities. Since 2002, as one of the industry’s most respected brokers, Texzon Utilities has helped businesses of all sizes make well informed, strategic decisions regarding their energy purchases, producing savings that track to the bottom line.