Who is a member?
Our members are the local governments of Massachusetts and their elected and appointed leadership.
The many choices available in the deregulated electricity market means that there’s some work involved in discerning the right energy plan.
Here are some things to consider:
Risk tolerance
Understanding your municipality’s tolerance for risk will help you identify the best electricity product.
Take, for example, a fixed product vs. an indexed (or “real-time”) product – opposite extremes on the scale of exposure to market fluctuations. A fixed-price product offers a stable rate for the term of the contract, no matter what happens in the energy market. This is a product for the risk-averse, because the price risk is assumed entirely by the electricity supplier.
An indexed product is geared toward electricity customers who have a high risk tolerance and can be flexible with their energy usage, even when given little notice to react. Like an adjustable rate mortgage, indexed products can result in lower costs because the customer takes on 100 percent of the risk. Customers, however, also need to be prepared to face some significant budget volatility.
For example, last December, hourly energy prices rose nearly 30 percent from the previous month. What’s more, these hourly prices can go as high as $1/kWh, without warning.
Indexed products can be a good tool for organizations with the resources to closely manage and monitor the energy markets and control their usage, or for those who can easily withstand significant cost overruns.
Natural disasters or geopolitical events can unexpectedly raise indexed rates. Customers who do not have the means to quickly shut down power sources when rates spike could find that their annual electricity budget can be spent in a matter of days.
The contract
When working with a new energy supplier, be certain to read the contract carefully – and “read between the lines.” Make sure the assumptions made in the pricing are based on realistic forecasts and not selected historical data that may no longer be relevant.
A good contract will clearly spell out any additional charges that may apply and, ideally, these will be at cost, without markup. Contracts that say “additional markup” should be reviewed carefully, as this may allow the seller to charge whatever they wish.
Referrals
A recommendation from a trusted source is perhaps the safest bet when entering into a contract for the long-term.
The MMA makes it easier for cities and towns to choose a supplier, by offering the MunEnergy program. The MMA’s legal counsel has reviewed and approved this electricity contract for the program in order to protect the interests of MMA members.
To learn more about the program and the best electricity product for your municipality, contact MunEnergy Program Manager Emily Neill at (617) 772-7513 or emily.neill@constellation.com.