Resources & FAQs

Energy suppliers exist to manage energy price volatility and to provide innovative products that match the needs of their customers. In order for power to get to your home or business, there are companies that focus on generating power (e.g., nuclear, gas, solar, etc.); then there are “Suppliers”. Suppliers buy energy from companies in generation and structure and sell that energy to utilities or directly to homes and businesses. Suppliers may go by different names including, but not limited to: wholesalers, Retail Energy Providers / REPs, or Alternative Retail Energy Suppliers / ARES.

There are a number of factors impacting the price you pay for energy. Depending on the state, the portion of the grid you are connected to, and your local utility, certain price variables may have a stronger or weaker impact on your total price of energy. The variable “energy” is often the largest and most volatile price component in your total price of energy and reflects the market’s expectations of energy supply (of either a fuel source or the power plants themselves) and energy demand. As investor perception of supply and demand fluctuates, along with fluctuations in the values of the underlying assets, the price for energy also fluctuates.

In 100% Fixed contracts, barring certain exceptions, the price cannot be adjusted during the term of the contract. These contracts can be more expensive than contracts where certain variables are “Passed Through” because the supplier needs to be compensated for taking on more risk in locking prices for the customer.

In 100% Passed Through contracts, the supplier has not taken the financial burden of the volatility risk on any price components. This means that the price the customer pays will vary from moment to moment for the term of this contract. 100% Passed Through contracts are generally less expensive but riskier for the customer than contracts in which certain price elements are fixed.

In Semi-Fixed contracts,  the supplier has taken the volatility risk on some, but not all price components. This means that the price the customer pays for energy will likely vary over the term of this contract. Semi-Fixed contracts are a risk and reward middle ground between 100% fixed and 100% Passed Through contracts. By varying which elements are fixed or passed through, the customer can match their risk preference to the contract.

Even though the supplier has fixed all of the price variables, the price of a 100% fixed contract may still change due to things including but not limited to the following: a change in law which materially changes the supplier’s costs to serve; a meaningful positive or negative change in the customer’s usage, outside of the allowance specified in the swing provision portion of the contract; the supplier going out of business (which would force a drop back to default prices); and force majeure. By working with Breakerbox, we’ll provide you with information that helps you understand how likely individual contracts are to experience price changes during their respective terms.

Making smarter decisions about energy procurement is just one way to save on your energy costs. You can also save by using less energy, better managing capacity, and/or taking advantage of utility incentives. Breakerbox understands these opportunities in their respective market contexts and can work with you to create a custom plan that reflects your business’s unique opportunities and restrictions.

Many businesses are establishing short- and long-term environmental goals or commitments. Purchasing from renewable energy sources is one way to contribute to those goals. The purchase of renewable energy certificates (RECs) demonstrates your commitment to environmental responsibility and supports your company’s goals. By adding RECs to your energy supply plan you are supporting the demand for new, clean, wind and/or solar power, able to match a designated percentage of your annual electricity use and able to make environmental claims about a reduction in greenhouse gas emissions associated with your annual electricity use, also known as “Scope 2” emissions.

Due to the principles of physics, some electricity is lost on its way from the generator to your meter. Accordingly, to make sure you have enough energy, the generator needs to generate a little bit more than what you’re going to use. If losses are passed through (instead of fixed) you would see either an additional line item on your bill or the bill would be multiplied by (1 + the loss percentage) to account for that lost volume. Line Losses can refer to both Transmission and Distribution Losses and will vary by Utility and Rate Class.

The credit rating of the supplier is a key risk factor to consider when signing a contract. The higher the credit rating, the less likely the supplier is to go out of business. If a supplier were to go out of business while you were under contract with them, you would be immediately put back onto “default” or “provider of last resort” rates, depending on their state and utility. And these rates may be higher than the other rates you could have received. AAA is the best, and C/D is the worst.