Why haven’t I heard that I can choose a lower Colorado natural gas rate for my business?
The reason most Colorado business owners haven’t heard that they can choose a lower natural gas rate in Colorado on their utility bill is a little complicated, but also fairly simple to understand.
I’ll start out saying all the information is available to the public, and you can read about the full history on the Federal Energy Regulatory Commission (FERC) website.
After the oil crisis in the 70s that skyrocketed natural gas prices, the FERC stopped public utility companies from making a profit on the natural gas they distribute to their customers. Since then, public utility companies can only earn a profit servicing gas lines and distributing natural gas, but they can’t mark up the price of the natural gas itself.
The FERC essentially empowered consumers with the ability to buy natural gas from a supplier they chose while still having their public utility deliver it to their homes and businesses with the exact same reliability and service they’re used to.
Here’s a great summary of the Natural Gas Industry history
Why are most people just now hearing about this?
Most Colorado business owners hear about this the same way – through some kind of sales effort either by a natural gas company, a natural gas broker or through your public utility. Even though these companies have had sales people calling on business owners for 30 years, their focus has mainly been on natural gas SUPER-users like hospital systems, school districts and large corporations – basically any business spending six or seven digits on natural gas.
You have to spend money to make money, right?
We’ve found that each of these brokers and gas companies charge a fee that’s typically based on the amount of savings they find for the customer – higher savings equal higher fees. Every company is different, but the fees usually range between 1.25x and 1.75x whatever the savings should be. To illustrate, we’ll use a number right in the middle – 1.5x.
$50,000 annual savings x 1.5x = $75,000 one-time fee.
Other companies charge an annual fee based on the amount of savings. If they can save a big manufacturing company $50,000 each year on their natural gas expenses, they may charge a fee of 25% of the savings every year.
$50,000 annual savings x 20% = $12,500 annual fee
That may seem like a lot of money for a fee – because it is – but most corporate executives will gladly pay $12,500 to get $37,500 in net profit every year. With either fee structure, the savings over 5 years would be $175,000 with the one-time fee or $187,500 with the annual fee. For an investment, that’s a pretty solid return on investment especially considering the cost of doing nothing would be $250,000 over the same period.
What about smaller businesses?
Most businesses across Colorado are small businesses bringing in a few hundred thousand dollars a year instead of the multi-million dollar revenue streams like the business entities mentioned above. They probably aren’t looking at $50,000 in annual savings either, but rather $500-$5000 in savings every year – which is still a lot!
$500 annual savings x 1.5x = $750 one-time fee
Since most of the other companies are charging a fee based on savings and their sales people can choose a commission based on a $75,000 fee or a $750 fee, which one do you think they’ll spend their time on?
SWiTCH is about people
While we help plenty of large organizations save money – some of our customers save over $30,000 every year – we wanted a solution to help small and medium-sized businesses increase their profits too. These are businesses owned by our neighbors and community members that are fueling our local economies throughout Colorado.
We decided to NOT have the same 30 year old business model that our competitors had been using and tossed the fees out the window. We wanted to create a simple way to help business owners find out if lower Colorado natural gas costs are available to them, how to switch suppliers easily and give the support and transparency this industry was lacking.
Even though SWiTCH Energy Advisors is saving Colorado businesses hundreds of thousands of dollars every year, there are still thousands of Colorado businesses that don’t know this is a simple way to add a few hundred or a few thousand dollars into their bottom line. We can’t promise savings for every business, but you deserve to know if the rate on your bill is the lowest it can be or if it could be lower.
Since it’s free to find out if you’re missing out on savings, what are you waiting for?
In our next post, we’ll explain some of the complexities with finding rates by comparing your natural gas rate to a cell phone bill.