Forming an Energy Buying Group

For many suppliers the sales and customer support and billing costs of small customers has caused them either to walk away entirely from this segment or to place premiums on prices for these customers. Customers can overcome this hurdle by purchasing through an aggregation or energy buying group.

In an aggregation the customer can gain lower prices and better terms and conditions while the supplier gains a reduced cost of marketing to the members of the energy buying group. Providing a supplier with warm contacts is attractive to a supplier.

Howell Energy Consulting has had over ten years of experience of building and servicing buying groups. A great means of getting started is through groups of customers represented by a trade association. Trade associations share like issues. By gathering customers with similar issues the key contract elements that the group would prefer to see negotiated can become a key element of a program. As an example property managers have unique requirements in the marketplace. Certainly the ability to assign a contract, to increase or decrease consumption as tenants come and go are different than in many other industries. Grocers have a different set of issues created by low margins and the high credit standards of many suppliers.

Using the association’s umbrella to purchase third party supply reduces the cost of marketing for suppliers and when presented with a large enough opportunity, suppliers may be willing to accommodate the special needs of the members. In addition suppliers may pass some of the benefit back to the association in the form of an outright fee or sponsorships. For More Information on Forming an Energy Buying Group call Derek Howell at 860-205-3863.