At home, the price of electricity feels like a given: You check your bill, you sigh, and you pay. But as a senior living community or provider, that price can be as negotiable as a professional athlete’s contract—and as complicated to negotiate.
Power prices depend on a complex combination of factors in a quickly changing market. The role of the consultant is to help the community determine the best match through analyzing its energy needs, its locations, its resources, and other factors such as risk and requirements.
APPI Energy is one of those negotiators of electric and gas costs and supply, with experience in procuring power under the best terms for health care and senior living clients. In a recent interview, APPI consultant Jamie Polend, EMP (a certified energy management professional), addresses several assumptions and myths around power costs.
Be agnostic about suppliers. In some areas of senior living supply, it’s good to build up and stick with a vendor relationship. This isn’t the best play with electric power, Polend says; the relationship with the energy consultant is the one to concentrate on. “We might reach out to 35 suppliers and have them compete for the customer’s business,” he says. Prices change quickly, and the competition can work to your advantage.
Don’t expect commodity prices to align with real-life prices. With negative oil prices at times in the past 12 months, some wonder why their heating bills don’t fall accordingly. A commodity price may be low, Polend explains, but the full price of power includes factors such as transmission and capacity, which may rise proportionately as the price of the commodity falls.
Getting “locked in” can be a good thing. Power contracts are typically set for several years into the future. If you get a favorable price, Polend says, it helps create budget certainty. In fact, one of the value-adds of a good consultant will be to prevent any budget surprises and keep all services running smoothly under changing or renewed contracts. Other costs will likely fluctuate—medication, infrastructure, equipment, and more—but you’ll have one number you can count on for a few years.
On the other hand … Energy consultants with robust data and forecasting analysis capability can get an educated idea of when prices are going to get lower. They can follow the data and recommend going into only a short-term contract under those conditions.
Keep your top priority in your sights: Reliability. There’s nothing more important, particularly in senior living, than a reliable power source. When there are issues with blackouts or power shortages, a power contract will provide “ancillary services” intended to seamlessly fill in the gap. This power could come from any of several sources; the part that matters is the seamlessness. “That’s the main thing, whether it be a backup source, a solar source, an artificial intelligence battery source, or just straight from the utility,” Polend says.
Don’t overlook what you can control. An individual community can do a lot to reduce its energy costs and/or reach sustainability goals—a factor that can be an attractive differentiator to prospective residents and families.
There are many resources that can help reach these goals, but one of them should be your power consultant. Look for an energy company that offers this value-add.
Vet and vet again. Polend hears of senior living communities and providers getting multiple pitches from energy consultants. Energy markets have something of a “wild west” reputation. Examine a company’s years in the field, capacity for research and data analysis, access to a range of suppliers, and experience in health care and senior living when making choices.
“The data always tell the story,” Polend says. An energy company should be able to make that story clear to you. Ask for forward price trends. Clear data visualizations such as charts should help you follow the story, Polend says. While companies such as APPI track data points into the millions, they should be able to zero in on the points you need to know to make decisions.
For more information on terms and rates in your energy contracts, see APPI’s “Understanding Your Energy Contract” at appienergy.com/news-and-resources/news/understanding-your-energy-contract-part-1/.
Q: WHY DID MY RATES SUDDENLY ZOOM UP?
You may have been a victim of “slamming.” This is when someone “obtains your account information and terminates your contract without your consent,” APPI says. You actually get slammed twice—once when you’re charged costly early contract termination fees and again when a promised low rate goes up. To learn more, visit appienergy.com/customer-service/faq.
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