Got approached by a broker here in Charlotte claiming they can guarantee 20% savings on our Duke Energy commercial accounts. Says they have some special relationship with suppliers and can lock us into rates below current tariffs. This sounds like snake oil to me but my CFO is interested. Anyone dealt with these "guarantee" pitches before? What's the catch usually?
Energy broker pushing "guaranteed savings" - too good to be true?
Derek, run the other way. I've seen this pitch a dozen times here in Memphis with MLGW territory clients. The "guarantee" usually has more holes than Swiss cheese - they exclude demand charges, only apply to certain months, or have escape clauses for market volatility. Read every word of that contract twice. Better yet, have your lawyer read it.
Reggie's right about the fine print. Had a client in Knoxville get burned on one of these deals with TVA territory. Broker promised 15% savings, delivered 3%, and my client was locked into a 3-year deal. The real kicker was a clause that let the broker adjust rates quarterly based on "market conditions." Total scam.
What Terry said. I audit energy contracts all day in San Antonio and these guaranteed savings deals are usually structured to benefit the broker, not the client. CPS Energy has pretty competitive rates anyway, so when brokers come in promising huge savings, it's usually through gimmicks or hidden fees down the line.
Ask them to put their money where their mouth is. If they're so confident in the 20% savings, ask them to take their commission only from the actual savings delivered. Watch how fast they backpedal on that "guarantee." Rocky Mountain Power territory here in Salt Lake, and legitimate brokers don't make promises they can't keep.
Great points everyone. I pulled out my calculator and even if Duke's standard Schedule LGS rates dropped 20%, we'd only save about $180K annually. This broker is claiming $240K in savings. The math doesn't add up unless they're playing games with demand charges or power factor corrections.
Derek, that math tells you everything. No legitimate broker can beat utility tariffs by that much without serious gotchas. In Nevada with NV Energy, we see maybe 5-8% real savings with a good broker on deregulated portions. 20%+ claims are fantasy or fraud. Stick with your gut instinct on this one.
Late to this thread but wanted to add - always ask for references from similar sized accounts in your utility territory. Real brokers will have a portfolio of satisfied clients they can point to. Empire District Electric customers here in Missouri have seen legitimate 4-6% savings with honest brokers, but never the wild claims Derek mentioned.