electricity name your price

Between lighting, refrigeration and heating and air conditioning, retailersuse an average of 62 billion kilowatt hours of electricity per year, accordingto the U.S. Energy Information Administration. Coupled with the skyrocketingprice of natural gas and historically high summer demands, electric costs takean even larger bite of c-store owners’ operational costs.

Most chains have already implemented the most well-known way to cut electric costs: conservation tactics. Installing energy-efficient lighting, cranking down heating and cooling systems after hours, using ‘smart’ thermostats, improving door and window seals, and making sure HVAC units are operating at peak efficiency.

But there’s a little known and highly beneficial technique most c-store owners haven’t yet exploited. Surprisingly, c-stores don’t have to accept the rate their electricity provider hands them. By exploring electric rate options, owners can drive down costs without reducing electric usage.

Here are some tips that will help c-store owners do just that:

Know if the c-store is located in a deregulated or regulated state. Ifthe store is in a deregulated market, c-store owners can shop around to findan energy supplier that will offer the best rate. On the other hand, if thestore is located in a regulated market, storeowners have no choice but to usethe utility company that’s legislated to serve their area. This means payingthe utility’s going rate which, in some cases, can fluctuate by as much as 30%monthly or quarterly with the price of natural gas and other fuel costs.

When a regulated state does not permit fuel cost adjustments, operators are in a more stable position and can strategically plan ahead based on the current rate. If the state does allow fuel adjustments, retailers can anticipate the financial effects by continuously checking with the utility to find out what the adjustment will be and when it will occur.

Maintain and leverage usage data. Usage data is a 12-month rolling recordof the number of kilowatt hours of electricity a store uses. C-store ownerscan use this information to measure their usage over time, and use this datato negotiate a rate that’s more in line with usage.

Simply bring the saved invoices to the utility company and ask about the different rate plans available for similar usage patterns. A utility company is under no obligation to set customers at its best rate—retailers need to push for better rates.

Aggregate for a better rate. Aggregation means forming an agreementwith other c-stores in deregulated markets to buy electricity as a group toincrease negotiating power.

C-store owners can launch aggregation efforts by contacting other stores in the area directly, or by working with an energy management consultant. Many state associations have special electricity programs (see sidebar) that help members get better rates. Some associations have their own aggregation groups that c-store owners can join. This greatly simplifies and speeds the process of finding other businesses to aggregate with.

Once an aggregated group of c-stores is formed, owners can get a quote from independent electricity suppliers and negotiate a contract that provides a lower rate. All of the stores in the aggregated group will pay this new, less expensive rate. In the end, retailers should arm themselves with as much knowledge as possible to hunt down the best electricity rate to keep the company’s budget from short-circuiting.

BUYING GROUPS AND STATE ASSOCIATIONS THAT OFFER PROGRAMS TO ITS MEMBERS:

California
California Retailers Association (CRA)
William Dombrowski, (916) 443-1975
Illinois

Illinois Retail Merchants Association (IRMA)
David Vite, (312) 726-4600 or dvite@irma.org
Massachusetts

Retail Association of Massachusetts (RAM)
John Hurst, (617) 523-1900
Maryland
Mid-Atlantic Aggregation Group Independent
Consortium (MAAGIC)
Tom Saquella (410) 269-1440 or MDRetail@aol.com
Texas
Texas Retailers Association (RAM)
Chuck Courtney, (512) 472-8261
Texas Petroleum Marketers and Convenience Store Association (TPCA)
Doug Dubois, (512) 476-9547 or dedubois@tpca.org
Washington D.C.
National Retail Federation (NRF)
Tracy Mullin, (202) 783-7971

By Jeff Hart, Contributing Editor

Jeff Hart is president and CEO of Cadence Network, a utility and telecommanagement and consulting firm. He can be reached at jhart@cadencenetwork.com

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