Category Archives: Pay Less for Energy

National Grid LogoIn a recent press release, National Grid congratulated its customers in Massachusetts (#1), New York (#3) and Rhode Island (#7) for ranking among the top ten states for energy efficiency.  Stanley Energy is proud to have two New England states in this top ten list! You can read the full text of the press release below:

Building on its 25-year history of award winning energy efficiency programs, National Grid is proud to congratulate its customers and the states where it provides electric and natural gas service for their achievement of making the list of the top 10 states in energy efficiency. The 2012 American Council for an Energy Efficient Economy state rankings place Massachusetts, New York and Rhode Island among the most energy efficient states in the country. This is the second consecutive first place finish for Massachusetts after unseating California for the top spot in 2011.

“Everyone involved in creating the policies and programs leading to this recognition, as well as our customers who have invested in energy efficiency measures, should be proud to know that incredible savings have been realized for energy consumers and the environment,” said Tom King, president, National Grid in the U.S. “Not only are our customers saving on their energy bills, but millions of tons of pollutants have been prevented from entering our environment due to the success of our energy efficiency incentives.”

In 2011 National Grid’s electric and natural gas energy efficiency programs served nearly 1.8 million of our customers in Massachusetts, New York and Rhode Island. The combined lifetime savings to be realized by customers through these programs is estimated at more than $1.35 billion dollars. Electricity savings in 2011 alone were enough to power more than 118,000 homes. Natural gas saved would have heated 10,700 homes for one year.

In the twelve-month period ending December 31, 2011, National Grid’s energy efficiency programs in Massachusetts served more than one million electric customers and 275,000 natural gas customers. The company’s combined energy efficiency programs resulted in program lifetime savings of an estimated $847 million on an investment of $176 million. The annual energy savings for electric customers was nearly 343,000 megawatt-hours, or enough electricity to power more than 57,000 homes for one year. Natural gas efficiency programs resulted in savings of 9.8 million therms. That’s enough energy to heat more than 6,000 homes for one year.

Savings by State
During the same period, National Grid’s energy efficiency programs in New York served more than 144,000 electric customers and 110,000 natural gas customers. The company’s combined energy efficiency programs resulted in program lifetime savings of an estimated $313 million on an investment of $86 million. The annual energy savings for electric customers was over 272,000 megawatt-hours, or enough electricity to power more than 45,000 homes for one year. Natural gas efficiency programs resulted in savings of over 6.4 million therms. That’s enough energy to heat more than 4,000 homes for one year.

Savings in Rhode Island are equally impressive considering that the company serves fewer customers in Rhode Island compared to Massachusetts. The company’s energy efficiency programs for electricity and natural gas served almost 260,000 electric and natural gas customers. The combined programs resulted in program lifetime savings of approximately $198 million on an investment of $38 million in the programs.

Total electricity savings for National Grid customers in Rhode Island in 2011 was more than 96,000 megawatt-hours, or enough to power 16,000 homes for one year. The savings in therms among gas customers in Rhode Island was 1.2 million therms. That’s enough natural gas to warm more than 700 households for one year.

The programs in Massachusetts and Rhode Island prevented more than 350,000 tons of carbon dioxide from entering the environment. That’s equivalent to taking 70,000 cars off the road.

National Grid (LSE: NG; NYSE:NGG) is an electricity and gas company that connects consumers to energy sources through its networks. The company is at the heart of one of the greatest challenges facing our society – to create new, sustainable energy solutions for the future and developing an energy system that underpins economic prosperity in the 21st century. National Grid holds a vital position at the center of the energy system and it ‘joins everything up’.

In the northeast US, we connect more than seven million gas and electric customers to vital energy sources, essential for our modern lifestyles. In Great Britain, we run the gas and electricity systems that our society is built on, delivering gas and electricity across the country.

National Grid delivers electricity to approximately 3.3 million customers in Massachusetts, New York and Rhode Island. It manages the electricity network on Long Island under an agreement with the Long Island Power Authority (LIPA), and owns over 4,000 megawatts of contracted electricity generation, providing power to over one million LIPA customers. It is the largest distributor of natural gas in northeastern U.S., serving approximately 3.4 million customers in New York, Massachusetts, and Rhode Island.

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electric utility transformersTypical utility rate structures are divided into three categories reflected on your electricity or natural gas bill:  customer charges, demand charges, and supply charges. Each charge is designed to cover specific costs incurred by a regulated utility. The bill also includes provision taxes that vary depending on your utility and local government.

Customer Charge

The first category is customer charges. These charges vary with the number of customers, but not the amount used by any particular customer. Customer charges recover costs associated with making service available to the customer, such as installing and maintaining meters, utility poles, power lines and equipment as well as meter reading and customer service costs. Most utilities charge a flat fee customer charge and it does not vary according to usage.

Demand Charge

The second utility rate category is called demand costs. Electric and natural gas utilities must be able to meet peak demand. Peak demand is the period of time when the greatest number of users is simultaneously using service. Overall system requirements for energy transmission and delivery drive demand related costs. Costs associated with the demand charge include:  capital and operating costs for production, transmission, equipment (transformers) and storage costs that vary with demand requirements.

Supplier Charge

The third component of an electricity or natural gas bill is the energy/commodity costs or supply charges. The supply charge consists of the costs associated with capital and operating costs to produce the energy, such as fuel costs and production supplies. These costs change only with the consumption of energy and they are not affected by the number of customers or overall system demand.

How Utilities Calculate Charges

The rates you pay are calculated differently for each charge category. The rates are typically based on total consumption or peak demand. The formulas for rate calculations are as follows:

Customer charge = fixed monthly charge

Demand charge = dollars x demand

Supply charge = dollars x energy use
Energy/fuel cost adjustment = dollars x energy use

Tax/surcharge = one or more of items 1-3 above
By tax %, dollars x energy use, or dollars x demand

1) Scan/email/fax your utility bills to your broker.

The broker will provide this information to qualified suppliers who need historical usage information to price the various competitive supply contracts they will offer you. Most information is obtained from your most recent bills. The suppliers may also request a signed LOA (letter of authorization) granting them permission to pull historical usage data directly from the utility. Either way, providing this information simply allows the suppliers to price the products and never locks you into any product.

2) Review pricing proposals, terms and contract length.

You should receive quotes from different suppliers for different products. Pay close attention to the pricing and the term of the contract. Also, make sure you understand the difference between fixed and variable priced products. The lowest current rate may not always be the best product for your specific situation. You must determine your risk tolerance and then evaluate the proper product to meet your needs.  A qualified broker can help you navigate this process by explaining the different products and negotiating with the suppliers on your behalf.

3) Choose the supplier with the best price and product to suit your specific needs.

After fully evaluating the different options, choose the right product for your situation. You will be presented with a supplier agreement. Read the agreement carefully and make sure it is consistent with the terms and conditions you have agreed to.

4) Monitor your utility bills to evaluate year-over-year savings and returns.

This optional fourth step will help you close the loop to ensure that your firm is actually receiving the benefits and savings from your deregulated energy supplier.  Monitoring can be as simple as using an Internet browser to view your energy bills. You will be able to view energy consumption data in aggregate and by fuel type for a single building or for all of the buildings in your portfolio.

In this article, we discuss 11 different advantages of energy deregulation.

Gas pipeline

Find the “Right” Product

Purchasing energy through the utility is only offered as an indexed product. The utility either generates or purchases the supply and charges a fee and the price fluctuates with the market. For instance, natural gas demand is much higher in the winter in the Northeast and prices typically rise with demand. Purchasing energy from a competitive supplier allows the end-user to manage rate fluctuation exposure and choose a product that fits savings goals and risk tolerance.

Lower Energy Costs

Many professionals are able to lower overall energy costs for their facilities by finding the right product and purchasing competitive supply. In some cases, the savings are significant and can make a direct positive bottom-line impact for the customer. Typical supply side savings are in the 10-20% range (based on utility rates at the time end-user enters into a competitive supply contract).

Price Certainty

Fixed price products decrease rate volatility and hedge against future pricing increases. The supply rate charged by the utility is a variable rate and can fluctuate based on many factors that affect the supply cost. Customers electing a fixed price product will eliminate rate fluctuations during the contract term.


Deregulation has created products of all shapes and sizes depending on the unique needs for a particular facility. Unlike purchasing supply from the utility in a one size fits all product, competitive purchasing allows the end-user to create a forward thinking energy purchasing strategy.


The reliability of your electricity does not change because you take advantage of deregulation. The infrastructure that transmits and distributes the energy is still handled and guaranteed by the regulated utility regardless of where you purchase the supply. You still contact the utility if the power goes out in a storm or if you have questions about your bill.

Products and Contract Terms

Prior to deregulation, utilities charged a monthly rate and the customer paid whatever the utility charges (usually determined by costs plus a fee). Deregulation has delivered a wide range of products and terms for the customer to choose from. The influx of new products also creates risk for the end-user because you could potentially choose a product that costs rather than saves money depending on unique energy needs. Many end-users enlist a broker to find the best product, term and pricing. Such options include:

Fixed Pricing

The rate is fixed for the duration of the contract. The options for fixed pricing include “all-in” or “energy only” contracts. Fixed pricing requires forward-looking intelligence to determine where the energy market is today and where it is expected to go throughout the term of the contract.

Index Pricing

An index pricing structure is essentially how the utility charges customers for supply. The pricing is an index price plus a supplier adder. Customers can typically purchase an index product through competitive markets at a rate lower than the rate charged by the utility.


A discount rate floats with the utility, but is discounted a certain percentage. Other pricing mechanisms that are advantageous to particular customers based on usage profile: “block and index”, “caps” and “collars”.


The contract term is a key component for any deregulated supply contract. Customers should carefully analyze forward-looking energy pricing estimates before locking into a long-term contract. All supplier quotes should provide pricing for multiple terms: 6 months, 12 months, 24 months, 36 months etc. Pricing for multiple term lengths will also provide insight into how the utilities view future energy pricing forecasts.


An option contract gives customers the ability to lock into a fixed price per KWH contract to reflect current pricing at any time during a variable price contract.

First, you need to verify that your state is deregulated for the energy source you wish to purchase in a competitive market. Next you must determine whether you have the capability and expertise in-house to find the right supplier and products for your organization. Purchasing energy supply through a competitive supplier is risky if the purchaser in uninformed or unfamiliar with how energy markets work. Brokers and aggregators negotiate power purchase agreements on a daily basis and have a good real time feel for the market and where it’s heading. Oftentimes a broker and or aggregator can procure energy at much lower rates than an end-user could get on its own. Make sure to follow our energy deregulation checklist before determining the best way to purchase energy.

interconnected groupsEnergy Aggregators

Aggregation is the grouping of utility customers to purchase as a group. Pooling purchasing power could result in more favorable pricing compared to the individual members purchasing based solely on their unique usage. Developing the right energy purchasing strategy is a complex challenge for busy facilities managers or business owners wearing many different “hats” within an organization. A reputable and qualified energy aggregator or broker acting as an independent energy advisor can help guide the person responsible for energy costs. Outsourcing procurement often results in significantly higher savings for the end user while mitigating downside risk. Choosing the right partner is crucial to maximizing the advantages created through deregulated energy markets.


  • You can reduce internal administrative expenses and maintain focus on your core business. The energy market is complicated and it may make sense for you and your business to outsource procurement services to a company specializes in energy procurement to save you money and time.
  • You can share fees with other entities in an aggregation group. This is an advantage for any entity because you can likely spread the aggregation/broker fees out with the other entities in the aggregation group. Lower fees combined with more purchasing power will result in further cost reductions.
  • Suppliers are more interested and pay more attention (more competition) with a larger purchasing block. Economies of scale come into play for aggregators. The more KWH combined in an aggregation pool lowers the fixed cost/KWH and results in lower rates for the users involved in the aggregation group.
  • -Lower rates result from combining dissimilar user profiles. Some businesses use more energy in the winter months and others in the summer. Irregular usage may result in higher rates from competitive markets because the suppliers can’t forecast usage throughout the year. Joining an aggregation comprised of end-users with dissimilar usage profiles may result in lower rates.

Factors to consider before joining an aggregation: 

  • Size of load – The amount of energy your building or business consumers during a period of time (Kwh or Btu).
  • Load profile – Your profile refers to how or when you use energy. Some businesses use approximately the same amount each month. Other businesses, for instance seasonal businesses, use more energy in some months and significantly less during other months. The inconsistent usage may increase pricing available to a particular customer.
  • Risk tolerance – Different products present different levels of risk. You should evaluate the appropriate level of risk for your firm before determining the best product.
  • Contract length flexibility – You should verify that the contract length for the aggregation group fits your particular risk profile and needs.