Energy aggregation is the practice of combining multiple meters and shopping them out to energy suppliers as one entity. The idea behind energy aggregation is that by adding the usage amounts from all meters, the total will likely fetch a lower energy rate from suppliers than pricing the meters out individually. Just like other commodities and goods, when you purchase energy in large amounts, you will likely receive a discount on the price. This is the reason large industrial users pay lower energy rates than the typical mom-and-pop shops.
Understanding energy aggregation and how it can benefit you is key to finding a lower rate. Depending on your usage, every tenth of a penny off the supply rate will significantly increase your savings. Whether you’re a business owner with multiple locations or you live in an HOA community, taking advantage of energy aggregation will help you get the most competitive energy rates on the market.
How Energy Aggregation Can Help your Business
The supply rates offered by energy companies can vary based on the service area they are providing service in. If you own a business with locations in different service areas, then you may notice one location is paying a higher rate than another location in the same state. A variable of factors can affect energy prices. One factor is the maintenance costs associated with keeping the power lines up to date so electricity can be safely delivered to the customers. These costs are passed on by the local utility company to the energy suppliers and finally to the customers.
If you have locations spread out in different service areas it might be possible to offset some of these higher costs. For example, if three of your locations are located in a service area providing competitive pricing, you can combine these meters with a meter in a service area where the pricing isn’t as favorable. The energy sector is very competitive, and a supplier may be willing to give you the same lower rate for the meter in the non-competitive service area to earn your business.
Pay a Lower Energy Rate
The concept behind energy aggregation is simple. Increasing your energy load will give you a more favorable rate from the energy suppliers. If you have five locations with each location consuming 100,000 kilowatt-hours per year, then combining these meters will give you an annual consumption of 500,000 kilowatt-hours. Shopping around with a load usage of 500,000 compared to 100,000 will give you more leverage from the energy companies.
Energy Aggregation for Residential Pricing
Residential customers can also enjoy the benefits of aggregating their meters for a lower supply rate. The average household may not be able to take advantage of this option. However, if you live in a Homeowner’s Association (HOA) or any other community you might be able to convince your board or neighbors to take advantage of aggregating all the meters. Combining your household’s energy usage with the community will likely give you a lower supply rate.
Unlike commercial electricity rates, residential rates are one-size-fits-all. If you’re shopping around for your household, don’t expect the energy companies to bend over backward to offer you a lower supply rate. However, suppliers do have brands that are specifically designed for large communities and HOA’s. For example, Lone Star Energy is a supplier based in Texas that offers competitive rates for large communities. Going down this route will lower your energy costs so you can spend your money on things that matter most.
Factors to Consider Before Aggregating Meters
There are cases when combining all the meters may not prove to be beneficial for getting the lowest rate. Commercial meters are very different than residential meters. A variety of factors are considered including demand patterns and load factor when an energy supplier determines what energy rate they will offer you. Having a poor load factor can mean paying a higher rate. For example, if you have three properties in total, and two locations have a poor load factor, then this can negatively impact the location you have with a good load factor.
ElectricRateSelect can analyze your meters and determine whether aggregating your meters into one entity will give you the lowest possible rate. Our energy advisors are some of the best in the field with over 10 years of experience. We will be happy to assist you with all your energy needs.