Commercial Energy Basics

Unlike residential customers, businesses are often billed based on not just how much energy they use (consumption), but when and how intensely they use it. Understanding these factors is critical to negotiating a better rate.

Demand Charges (kW)

Utilities charge for the highest amount of power you pull from the grid at any single 15-minute interval during the billing cycle. Lowering your peak demand can significantly lower your bill.

Load Factor

This is a measure of your efficiency. A high load factor (consistent usage) is attractive to suppliers and can earn you lower rates compared to a "peaky" load profile.

Contract Volume

Larger usage means more negotiating power. Small businesses might shop off-the-shelf rates, while large industrial facilities often negotiate custom contracts.

Negotiation & Strategy

When your contract is up for renewal, don't just auto-renew. Commercial rates fluctuate daily based on wholesale markets.

  • Timing is Key: Energy markets are often lower in "shoulder months" (spring and fall) than in peak winter or summer.
  • Check the Term: Sometimes a 24-month or 36-month contract offers a better rate than a 12-month deal because it provides long-term stability for the supplier.
  • Audit Your Bill: Ensure you are classified in the correct rate class. Errors here can cost thousands over time.

Business FAQ

What is a "blend-and-extend"?

If market rates drop while you are in a contract, some suppliers allow you to extend your contract term at a lower overall rate, blending the old high rate with the new low rate.

Do I need a broker?

For small businesses, you can often compare rates online yourself. For large commercial or industrial usage, a broker or consultant can help navigate complex custom pricing structures.