July 2021 - Quarterly Market Letter
On behalf of the team at 5, I am pleased to forward our market letter for the second quarter of...
Electricity and natural gas contracts may appear to be similar from one supplier to the next. However, there are nuances with terms and language that can be open to interpretation on how energy cost components are treated that make it nearly impossible to compare offers across multiple suppliers. Untrained eyes will often overlook details in contract language that can have significant implications for clients. Attempting to select the best supply offer is a major challenge for many clients and often the lowest price on a bid sheet is not always the best option for a client.
Obscure energy contract language can also create unintended consequences that may affect a client’s operations. This is especially evident during critical events, like the sale of a business, when operational changes or extreme weather cause significant usage variations, when a contract expires to a default rate, or when a client accidentally books overlapping supply agreements. Few clients have the necessary time or in-house expertise to thoroughly understand, challenge, and negotiate with suppliers the more nuanced details of the agreement, which often requires complex mathematical modeling and deep legal knowledge of the energy space.
A large part of 5’s success in helping clients comes from the team’s contract review and negotiation team. Led by Chief Risk Officer and Co-Founder, Jon Moore, 5’s experts understand the interdependence of contract terms and legal language used throughout an energy agreement. In fact, at the onset of deregulation, Jon Moore served as the COO for Constellation New Energy, a role where he utilized his Yale law degree to create some of the original supply agreements in the deregulated energy industry. Together, the team at 5 leverages its combined expertise to guide and advise clients on contract differences between various offers and reviews specific contract details, including assisting with any existing supply agreements as well.
Contact Us to learn more about how 5 can help with reviewing and negotiating your power contracts.