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Business Operations

It's in the way you use it

October 11, 2010
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Jeffrey Mayer is the president and CEO of MXenergy, a natural gas and electricity supplier, based in Stamford, CT.

Mayer recently spoke with Professional Carwashing and Detailing and gave carwash operators advice for reducing their energy bills.

Professional Carwashing and Detailing: What are some ways owners and operators can cut down on their energy bills?

Jeffrey Mayer: We don’t sell gasoline, but we do work with carwash, detail shop and quick lube owners who can take control of their buildings’ energy bills in a variety of ways. The first, and by far one of the most effective, is by choosing to enroll in a fixed–rate plan that locks in long–term price protection.

Fixed–rate energy plans safeguard a business from unexpected increases in energy costs, regardless of whether prices rise because of natural disasters, limited supply or political crises.

Also, extend and expand tax credits and deductions for energy efficiency: Making the building more efficient and insulating properly would reduce many businesses’ consumption by up to 30 percent within a year. Solar panels are almost cost–effective and businesses need to install them now.

PC&D: When would an operator start to see a difference in his energy bill?

JM: It varies by market. While there may be a comfort level at remaining at the mercy of price–setting state agencies, fixed–rate plans do eliminate the highs and lows that make bills tough to manage. Small businesses should try to look out as far as they can and set a rate for three years or more.

Over time variable rates may rise or fall, but a fixed rate won’t. Our plans can be compared to a fixed–rate mortgage, as opposed to those adjustable–rate ones that have thrown the credit markets for a loop.

PC&D: What is the best way to choose an energy provider?

JM: Every carwash, detail shop and quick lube owner should ask three questions before choosing an energy provider and plan:

Fixed or floating: Should I lock in my energy price or let it float with market prices?

This answer depends on whether you can pass on increased energy costs to customers. If your business can charge higher prices, then locking in is probably not necessary. On the other hand, if prices cannot be passed along to the customer, locking in energy rates may be necessary.

Term: How long should I lock up my prices?

The duration of fixed price protection is generally from one to three years. If a business believes prices may come down in the future, a shorter term is advisable. If a business does not have confidence in its long–term projections, then longer term protection may be advisable. That way, if prices go down in the short term but bounce back in the long term, the business will be protected.

Price: How much should I pay and whom should I pay?

Price is the third question. But sometimes it is more important who you buy from. A fixed price from a supplier that goes bankrupt when prices spike will be as helpful as a policy from a bankrupt insurance company. Beware of low–ball prices. If you get a quote that looks too good to be true — it probably is.

Before signing up for a fixed–rate energy plan, be sure to do your due diligence on the providers you are considering. Make sure that the provider you choose has a strong balance sheet, access to financial capital and the risk management processes that are necessary to enable it to offer the long–term protection being advertised.

PC&D: Is it difficult enrolling in a fixed–rate plan and how does one enroll in such a plan?

JM: Before signing up for a fixed–rate energy plan, business owners should do some research on the providers that operate in the region. I suggest that they make sure that the provider has a strong balance sheet, access to financial capital and the risk management processes that are necessary to enable it to offer the long–term protection advertised.

These may not be the standard questions when a business owner calls up a provider to consider becoming a customer — but with today’s energy market, they are important to ask. If a business owner can’t get the answers then I suggest they keep shopping.

PC&D: Are there any myths about energy usage that are untrue?

JM: I don’t know about myths, but there is a lot of hot air and debate.

I do believe that conservation plays a role, but switching the lights off can only be done so often and makes only so much impact. Our misuse of energy goes beyond what we can do in our daily lives, and unfortunately the government and the large energy producers are setting the agenda.

We can open a dialogue with our representatives in government and the private industry. There are the tax credits for on– and off–shore natural gas exploration. We are undermining our national security interests and bankrupting our economy by sending billions of dollars abroad for crude oil and natural gas exploration, production and distribution. Let’s do everything we can to keep the funds at home.