Supplier Contract Terms & Conditions Drive Customer Choice

Salisbury, Md., December 3, 2013—Middle-market businesses rank contract terms and conditions as more important than customer service in their selection of a competitive electricity supplier, according to a recent survey by the Energy Research Council (ERC). In April 2013, the ERC conducted a survey of 1,254 middle-market companies in states that have deregulated energy markets to assess how they procure electricity supply.

The survey found that 56% of respondents consider contract terms and conditions to be very important in their selection of an electricity supplier. Only 42% ranked customer service as very important. Although 85% of survey participants ranked “price” as the most important factor impacting supplier selection, ERC analysts found that a major challenge for middle-market companies is how to identify contract conditions that impact the final bill.

“Two fixed-price contracts could produce different electricity bills, based on bandwidth restrictions, capacity charges, line loss provisions, change-in-law clauses, and other contractual items that create pass-through fees,” explained James Moore, Ph.D., President of the ERC. Early termination fees and auto-renewal provisions are additional contract features that affect price. “Understanding what will happen if your business uses significantly more or less energy than in the past, and what happens when the contract expires, is crucial to selecting the right supplier,” said Dr. Moore.

In July 2013, the ERC conducted a second survey to gauge the middle market’s familiarity level with supplier contract terms and conditions. Those survey results will be detailed in future ERC research reports. The April 2013 ERC survey examined how frequently middle-market companies review energy costs, how many price quotes they evaluate, and which factors impact selection of an electricity supplier.

For further insights, please read our research report, Best Practices: Electricity Procurement or contact us for more information about our research programs.

About the Energy Research Council
A consortium of leading energy suppliers, the Energy Research Council (ERC) conducts quarterly research to understand the energy needs, practices, and priorities of middle-market companies. The ERC mission is to provide facts-based research and thought leadership that educates middle-market businesses concerning effective energy acquisition and management practices. A two-way dialog is created between ERC Charter Sponsors and middle-market companies. High-quality market intelligence is promoted in a resource library that reaches members of more than 100 trade associations and the broader business community.

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