Energy choice is becoming more common across the United States. Many states have adopted full energy choice or a variant allowing partial choice depending on the market. However, no matter how accepted or even ubiquitous energy choice is, there are still pervasive myths that harm the industry which can be tough to shake. Here are the top five myths about energy choice and the truth about each one.
Myth #1: The utility company that used to have the monopoly on energy is the best choice for energy
Truth: Everyone buys and sells energy in the same marketplace, so there’s no “advantage” or best supplier for energy beyond price and customer service.
So many companies and brokers buy and sell energy but they all participate in the same energy exchange, thus there is no appreciable difference between the original utility and any other provider. Any energy supplier can use the same power source as the utility and not suffer any difference to consumers. There are a variety of ways both utilities and brokers work to serve customers, including lower prices and better marketing. However, the actual energy product never differs no matter the name on the bill.
Myth #2: Leaving the utility company as a customer causes power or service to be unreliable & switching to a private provider leaves you without service
Truth: Your service and response to outages remains the same no matter who you buy energy from.
Some people believe that by leaving the utility company, you are on a lower priority list for response times after outages or when your service becomes spottier. However, nothing could be further from the truth. The utility company has to maintain all the service lines and ensure that the is no “discrimination” against consumers for not buying from them. Likewise, switching to a private energy provider does not leave you without service.
Myth #3: Government-owned or otherwise monopolistic energy companies are not interested in making a profit and are better for long-term energy production
Truth: Private entities are no worse for energy than government owned energy companies or energy companies that act as monopolies.
While some may argue that government-owned or monopolistic energy companies have less incentive to make a profit and thus will not cut corners, there is no proof to that argument. For example, some energy companies continue to make profits despite being a monopoly. Additionally, they may not demonstrate any extra effort in reinvesting those profits into clean energy. Private energy companies help create a more competitive marketplace so that customers can save money and utility companies can modernize and innovate.
Myth #4: You are obligated to pick the utility company as the only energy supplier where you live
Truth: In many states, there are a variety of options to get your energy that don’t require you to do business with your utility company.
The ever-growing movement which allows consumers to choose the supplier for all or part of their energy needs has opened up markets in many states to energy choice. Consumers can now choose who supplies their energy with the help of brokers, so they save the most money possible on their bill. Whether it be electricity or natural gas, brokers are helping revolutionize how energy is sold and marketed in order to help spur competition benefitting customers.
Myth #5: Private energy suppliers are unreliable and can lead to supply issues
Truth: Signing up with a private energy supplier is no different than staying with your utility company.
The utility company still has to provide you with power no matter the vehicle you choose, and private energy suppliers often provide a cheaper alternative for customers. Any utility company that takes retaliatory action may be subject to penalties under the law. That way, there is a very strong incentive for utility companies to continue to provide service to every consumer, no matter how they choose to get their energy.
While there may be some myths surrounding energy brokers and the competitive energy market, the truth is that it is just as safe as purchasing directly from the utility company. Add to that the fact that customers have the potential to save by buying competitively, and you have a winning way to get energy where everyone wins.
For many of us, the prospect of using energy is as simple as turning on a light switch. The way we grew up dealing with energy was direct: we contracted with a company which is often the only power producer and distributor in the state, and we pay the rates they set. It is one of the last government-controlled monopolies in the United States which impacts our day to day lives. Importantly, like some states, Florida is now taking steps towards energy deregulation, which would help increase consumer choice when buying power. Many may ask if you can choose which airline to fly, which vendor to purchase groceries from, and a litany of other consumer choices: why can’t you choose an energy company?
What does deregulation mean and what is its current status in Florida?
As of now, Florida Power and Light (FPL), is the only energy provider residents of the state are able to use. Unlike Florida, other states have allowed for power companies to come in to their state markets and charge competitive rates in order to provide the best deal possible to consumers. This also has the additional benefit of fostering competition in the market.
Across the country, many states have begun the process of deregulating. In some states, they have already implemented full deregulation. However, in other states, partial deregulation was achieved by allowing only the energy market or the gas market to be competitive. As deregulation is not yet legal in Florida, allowing for consumers to pick who they purchase power from is still seemingly a foreign concept, but one which will be decided in 2020.
Where is deregulation politically and legislatively?
Currently, supporters of a statewide ballot initiative are gathering signatures to help ensure it appears before Florida voters on their November 2020 general election ballot. They have until the February 1, 2020 deadline to gather and submit more than 766,000 valid signatures to meet the legal requirement for an amendment to the Florida constitution to be placed on the ballot.
In addition to these typical hurdles, deregulation has become a political flashpoint as the Florida Supreme Court has heard a challenge from Florida Attorney General on the ballot initiative’s language. She has argued that it is invalid under Florida’s single-subject rule, and that the language which will be placed on the ballot is misleading. Others such as FPL, Duke Energy, the Florida Public Service Commission, the Florida Association of Counties, the Florida League of Cities, and many others have concurred with this interpretation or filed amicus briefs, (also known as friend of the court briefs) supporting this position. The Florida Supreme Court has not indicated when it will rule on this challenge.
Florida voters seem more optimistic on whether or not to support energy deregulation as an initial poll in June by St Pete Polls demonstrated slightly more than 66% of voters would support such an amendment. Constitutional amendments in Florida require 60% or more of the vote to pass, so if backers can convince a similar percentage of Floridians to vote for the measure, they will be in good political shape.
What’s next in Florida energy deregulation?
First the Florida Supreme Court must allow the ballot language to remain and the initiative’s backers must reach the required number of signatures to place the amendment on the ballot. Following that, a heated political campaign will likely occur between those who want this amendment to pass and those who oppose it. In the end, Florida voters will decide whether they believe energy deregulation will be helpful in working to bring down the price of energy, increase market competition and efficiencies, and be an overall benefit for the state. The alternative for Florida residents is the status quo monopoly, which provides little to no recourse for customers who would prefer to join the ranks of those in states like Texas who have deregulated and are working to continue to lower energy costs.
Top 5 Signs You Need a CRM For Your Energy Broker Business
In today’s competitive environment, every energy broker needs to be on top of the latest moves in the market, including: how price fluctuations impact their customers both in the short and long term, and how the energy brokerage business can help customers save money. Keeping track of these many moving parts is more than a full-time job, and one misstep can cost you money or, worse, a customer’s loyalty, business, and potential referrals moving forward. If you keep running into these 5 issues, it’s definitely time to get Customer Relationship Management (CRM) software for your energy broker business.
You struggle to stay organized and keep track of all the “moving parts”
Between e-mails, excel sheets, and other documents, shuffling between tabs can quickly go from minor annoyance to time drain, and any drain on your time is a drain on your money. Investing in a CRM for your energy broker business will ensure that all that data you need is at your fingertips on a single screen; so you can spend more time working with customers and energy suppliers, and less time figuring out how to tab in and out of the information you need.
You sometimes lose track of customers and they “fall off”
It happens to us all: you forget about an important renewal deadline for a customer and have to scramble to make it right. No broker or businessperson wants to be in the position of letting a customer down; so what if there was a way to help automate the renewal process? A CRM can remind you of each customer’s renewal deadline, so you can pre-empt the problem by working with the customer and negotiating with suppliers to ensure that you get the best deal possible, and your customer feels like an essential part of your business. You can also ensure that the entire contract process can be done online in order to save time, paper, and lock in prices quickly, so every deal with you is a win for your customer.
Communicating with suppliers is onerous and getting paid is troublesome
While many of us operate our businesses at lightning fast speeds and our customers demand even faster work, sometimes communicating with suppliers doesn’t happen at quite the same pace. Undoubtedly, it’s frustrating to have a customer on the phone and not be able to provide quick, accurate quotes so you both can make the best decision possible in order to satisfy their energy needs. Even worse is when through sheer volume of orders, you forget to follow up with the supplier regarding payment leaving money on the table. A CRM will help you with supplier relationships by making communication easier and helping set up a mechanism where you get paid quickly and efficiently.
You never have all the information you need about your business
Commonly, many business owners need custom reports demonstrating how the different parts of their business interact with one another and stand alone. Working off of Excel, Word, and other basic software will only get you so far. Relying on employees to pull and compile reports takes time, effort, and is likely costing you money in lost renewals or new customer sign ups. Getting a CRM like Enerclix retail energy brokerage software that can create specific reports will help you see every part of your business (including new leads, how profitable deals are, and supplier and customer relations) at a glance without sacrificing both you and your employees’ valuable time.
You feel tethered to a vulnerable server
Every businessperson’s worst nightmare is the middle of the night call: the server crashed and we’ve lost all our data. For many, an old-fashioned server at the office might be how their business started, but as it grows and becomes more streamlined, your data solutions have to be just as sophisticated. Investing in a quality CRM will make your data cloud-based, ensuring that even if your server crashes or malware infects your computers, the back-ups upon back-ups will keep your data secure and your business functioning.
In a fast-paced business environment, every minute spent on a task not related to maintaining customer relationships or seeking new customers is money lost. Investing in software which automates and streamlines your day isn’t a cost, it’s an investment in growth that will pay dividends for years to come.
Are More States Deregulating Energy?
What is energy deregulation?
Energy deregulation is the “restructuring of the existing energy market.” It allows users to choose from multiple energy providers based on different rates that suit their personal needs and specializes in various product offerings. According to sparkenergy.com, it’s essentially, the “simplification of government rules and regulations that constrain the operation of market forces.”
Why is energy deregulation important?
The purpose of this process is to decrease the company monopolies by increasing the competition.
How did energy deregulation originate?
The deregulation of energy, both natural gas and electricity, started when the Federal Energy Regulation Commission (FERC) decided it should limit its authority to wholesale transactions. This made it possible for each state to decide what it wanted to do, regulate their natural gas and electricity, or allow competitive companies to determine their prices.
The state of Texas has the most deregulated energy with 85 percent (sparkenergy.com). That means Texas has the largest choice for energy providers, whether it be for business or residential purposes. That being said, the majority of the residents and business owners of Texas are required to pick an energy retail provider.
The decision for states to deregulate are based on their current energy consumption and if the energy providers offer intriguing incentives to help cut back the consumer usage of natural gas and electricity.
Businesses made a large impact on deregulating energy. According to an article from the New York Times, “businesses led the campaign to deregulate electricity in the mid-1990s, convinced that introducing competition to the generating and sale of power would drive down electric bills.” This article was published in 2001 and it’s current that out of the three states listed, only California has failed to deregulate energy.
Pennsylvania recently started the deregulation aspect of energy consumption. January 2011 was the start of the open energy market. “I’ve regulated under the old way and under the new way, and this is so much better” because “you don’t make your customers captive to the inefficiencies and cost overruns of the power plants,” says James H. Cawley, chairman of the Pennsylvania Public Utility Commission.
How does energy deregulation work?
First, companies that generate or produce natural gas or electricity gather their product, either by generating electricity or producing natural gas.
Then, an energy retail provider gets the order from their customers and meet their needs all while competing in an open market.
These companies rely on the local utility companies to maintain all of the necessary hardware to keep an efficient flow of gas or electricity to your home or business.
Why do some states not want to transition to an open energy market?
Arizona for one is an energy regulated state. The residents of Arizona have voted against energy deregulation in favor of their current energy provider, Arizona Service Co. APS has broadcast the negative effects of energy deregulation, stating its residents need “to reflect on the stable, reliable and increasingly clean framework for the provision of electric service that exists in the state today, much of it attributable to the Commission itself, before moving too quickly down an alternative path.” The company states that energy reliability will be jeopardized and it can cause a number of problems with existing law, and clean energy policies.
Some states, like California, Alaska, and Hawaii have high energy rates. One reason for such high rates is that the energy companies get a certain percentage of the energy they sell from different sources, such as wind and solar energy.
California, in particular, uses a different tiered model to ensure they get the most from their consumers and also give them a fair shot. Large homes in warmer regions of the state spend more money on their energy, typically labeled tier three. Smaller homes in regions with a more temperate climate spend less, labeled tier one and two depending on the energy consumed. “California’s average retail rate in 2018 was 16.7 cents per kilowatt-hour, as compared to a national average of 10.6 cents, and almost double the state’s total average rates two decades ago,” according to data from American Public Power Association.
Oklahoma has a fixed, regulated energy process. This state also has one of the lowest energy rates in the country. Therefore, Oklahoma isn’t looking to deregulate its energy because of this. Deregulating energy is for the states that have higher rates and for residents that need a better deal than what is given to them.
Other states such as Washington, produce a large chunk of their electricity from water, which is cheaper, sustainable and less harmful than burning coal or gas.
According to utilitydive.com, “the American Public Power Association’s annual review of retail rates in deregulated and regulated states shows that average total rates in regular states have increased by almost the same amount as in deregulated states since 1997.”
The same article from utilitydive.com says, “between 2008 and 2012, the weighted average rates in the deregulated states declined by 0.7 cents, compared to a 0.6 cent increase in regulated states. But since that time, rates have increased by a higher rate again in the deregulated states, from 11 cents to 11.9 cents, versus 8.9 to 9.6 cents for regulated states.” This implies those deregulated states had better rates within these four years compared to energy regulated states.
The same article states that “rates for residential properties have increased about half a cent more in deregulated states overall than they have in regulated states.”
What are the benefits of deregulated energy?
While there are some drawbacks to have deregulated energy, there are still many positives for governments to deregulate it.
Consumers are able to choose their own plans and products that are able to fit their budget and monetary concerns. Users are also able to choose what kind of energy they would prefer, different companies offer different types of energy to use if they care enough about the environment.
Purchasers are allowed to switch energy providers and not suffer from a lack of energy during the transition. It is an easy and convenient process because you do not have to change or replace any hardware.
Currently, 56 percent of the United States has some form of deregulated energy, whether it’s electricity, natural gas, or both. Most states are still debating on if they should deregulate energy or not in the future.
nytimes.com. N.p., n.d. Web.
pennlive.com. N.p., n.d. Web.
sparkenergy.com. N.p., n.d. Web.
Energy brokers are the ones who help families and individuals get the best deals on energy in their area. They sift through the different companies and look for ones that have the best deals and offers based on their specific needs and requirements.
The big question people are asking is if energy is being purchased online.
The answer is simple. Yes, it is.
The world is evolving from face-to-face meetings and deals with an online presence that makes up the company.
People are using Skype, Zoom, and Google Hangouts, just so they can meet with people and not have to leave the comfort of their home or office. According to NPR and Marist College, 76% of United States consumers shop online. That is a large chunk of people. It is also forecasted to reach 300 million online shoppers as soon as 2023. That is a ton of people who are preferring to sit in their homes and buy things online versus going out and looking at different products and speaking to people in person.
People can buy practically anything online, why not energy?
Buying energy online is a simple task. People want to spend less time being harassed by a salesperson and more time enjoying the products they buy. If they can search and buy their energy source from the comfort of their own home, why wouldn’t they? It’s easier and they can have more time to collect their thoughts and list out their specific questions. Yes, online is a quick and snappy venture, but it is also a stress-free way to look at different products and compare and research them.
Energy deregulation is a marvel in this economy. It creates more holes for different and competitive businesses to fill. Energy deregulation took the monopoly that was “big companies” and made it to where smaller companies can jump in and provide a custom use out of the energy rather than cookie-cutter prices and services.
According to directenergy.com, “in deregulated energy markets, most retail energy suppliers offer a comprehensive array of options compared to the local utility, including fixed pricing, index pricing, and energy efficiency and management strategies.
With energy accounting for about 30 percent or more of the annual operating budget of a typical office building, energy purchasing deserves your attention. Energy deregulation presents businesses of all sizes with the opportunity to choose from a variety of suppliers, products, and services to manage your energy budget.”
The WashingtonPost.com posted a really great article about energy deregulation and how it came to be, to sum it up,
“1. Dissatisfaction with the prevailing system of electric power regulation increased significantly in the decades since the late 1960s when the inefficiencies of the system started to become clear. Regulated rate-setting was blamed for removing the industry’s incentive to lower prices by becoming more efficient. In response, economists and other public policy analysts stressed the advantages of competition over regulated monopolies and promoted the idea that free markets can reduce inefficiencies and drive down costs and prices as a result.
- Deregulation in other industries has drawn new attention to the electric power monopoly. Many key industries – such as airlines, railroads, telecommunications, trucking, and natural gas were deregulated in the 1980s.
- Power prices vary substantially from state to state.
- Nonutilities are entering the business and can generate power for less. Technological improvements have prompted nonutilities – also known as independent power producers to enter the competitive power market.
- Although it was not the intention of the Public Utility Regulatory Policies Act of 1978 (PURPA), the law did lay the groundwork for competition by opening wholesale markets to nonutility producers of electricity. PURPA was part of the National Energy Act, which was passed after the Arab Oil Embargo of 1973-74 in part to reduce U.S. dependence on foreign oil.”
Energy is a valuable commodity. We need it for everything we do. Even when we are sleeping, or when there is no one in the office, energy is being used. Deregulated energy helps keep that price lower while helping fuel the local economies.
Customers love when their broker/salesperson/professional is transparent. Do not be standoffish when it comes to answering personal questions such as: “how do you get paid?” Be honest. They genuinely want to know how you get paid and what kind of percentage of their money goes to you and the business you represent and what goes to providing the actual energy they are buying.
Your potential customers also want to know what kind of contracts you have available. Do you have flexible energy contracts? What about collective purchasing contracts? And the quickly ascending, green contracts: people are becoming energy conscious and efficient, and they want to know what they can do to be more sustainable and to help the planet. Potential customers also want to know how many suppliers you have access to. The more suppliers you have, the more appealing you look to the client. Your potential customers also want to know what services you will give after they sign the contract. Customer service is an important factor: your broker shouldn’t vanish after procuring your energy, they should be focused on developing an ongoing relationship. They should also continue to work on understanding your business, and stay up-to-date on changes within your company and industry.”
Be sure to let your customers know what kind of services you offer, free and paid. If they do not ask right away be sure to give them access to a website or something similar that lists out your different contact information and the services, you provide.
Having an energy broker business is so much easier when you work with Enerclix. They provide retail software specified to energy and it features a new Live Marketplace. With this software, you can instantly see prices from all of your suppliers and you can schedule your own live reverse auctions for your clients. It’s the perfect tool for your end-to-end sale needs. It has all of the information you need to give your clients peace of mind that they chose the right broker to deal with.
As an Energy Broker, you are giving consumers the right to choose. Before energy deregulation, consumers had no cheaper alternative to purchase energy supply resulting in a lower quality of service and higher utility bills. Explaining this concept to potential customers isn’t always simple. For this reason, we have come up with 5 tips that will help you grow your business.1. Know what you are selling
This may seem simple enough, but consider this example: Have you ever walked into a shoe store and asked what the best type of shoe is for running? If you haven’t, try it out; You will likely receive a partial response. The salesperson may know which shoes are designed for running, but probably won’t know what the benefits of each running shoe really are. The same goes for energy brokers. Although you may be confident that you know your business inside and out, it is important to remember that there is always more to learn. When you are knowledgeable in your field, it shows! Likewise, if you are not, your potential customers will pick up on it, creating roadblocks when it comes time to close.
2. Avoid repetition
If you are cold calling or going door-to-door trying to sign new clients it is easy to become repetitive. Although the next customer may not have heard your pitch before, it is fairly obvious if you have been repeating the same thing over and over. People tend to get bored hearing a “pitch”. Instead, try changing things up. Don’t always start with the same 5-minute pitch – try saying something a little different. This will also help you test various methods of selling the same services.
3. Find something in common with your customer
This doesn’t just go for energy brokers, this goes for all salespeople. When speaking to a potential customer, small talk can be the key to securing a deal. If your product adequately fulfills the wants and needs of the customer, then the only difference between you and your direct competitor is YOU. In order to ensure that customers will choose you over your competitor, spark up a conversation! Finding an engaging topic of conversation may help you secure them as a new customer.
4. Be ready to close the deal:
There is nothing worse than getting the okay from a customer, but not having everything you need to secure the transaction. In order to avoid running into this issue, you may want to consider an automation software [hyperlink to enerclix homepage] to help you close deals. Remember, no one likes to wait. For this reason, obtaining new clients without first having the necessary tools to secure the transaction is not the best idea. Doing so may turn a sure thing into a sure loss!
5. Be confident
Always remember that customers in deregulated states have the right to choose their energy provider. You are helping them take advantage of that right, so make sure they know it!