Product and Services

There are multiple type products to serve your energy needs; it depends on how much risk you are willing to take regarding the energy market or how much time you are willing to spend managing your energy supply.

Fixed Rate

The most common product is called Fixed Rate. Like the name implies, the rate is fixed during the entire term of the agreement. This is a perfect product for anyone trying to avoid spending time managing their energy supply.

Most small businesses are best served by Fixed rate products because they do not divert your time from your business; you let the energy company work out the details for you between winter and summer procurement.

MCPE

MCPE is another product or type of contract you can use. MCPE stands for Market Clearing Price for Energy. This product allows a business to purchase a block of energy (based on forecasted usage), but in the event they need more energy there is not a penalty for the excess usage. The company just pays the variable market rate for the interval when they exceeded their usage. This variable market price is calculated in 15 minutes intervals throughout the day.

MCPE price is historically lower than the Fixed price products, but if you exceed your block frequently you are susceptible to the variable market price which can make a particular interval much more expensive. The variable market rate can be affected by excessive demand on the energy grid caused by a heat wave or winter storm. This can cause more demand for energy or a sudden reduction of generation in the system which could come as a result of a power plant being off line for maintenance (planed or unplanned).

It is clear you can benefit from an MCPE product, but you are assuming a risk regarding energy supply cost. In some cases this additional risk results in significant expenses that can drive a company into financial problems, especially if they don't monitor their usage and market conditions.

Heat Rate

As your company grows you may want to consider more flexible products like Heat Rate. The Term "Heat Rate" reflects to how much fuel is needed to generate electricity. Usually expressed in BTU per kWh (British Thermal Unit per Kilowatt-hour).

In electricity products, Heat Rate allows a customer to link the price paid for electricity to the price of natural gas in an index like NYMEX natural gas index or Houston Ship Channel Index.

Heat Rate products are usually priced in the following format:

Energy Price = Heat Rate + Gas Index + Retail Adder

In the above formula the Heat Rate and Retail Adder components are Fixed, but the Gas Index is variable and can change significantly depending on market conditions. For example, the Gas Price for NYMEX index fluctuated between $1.86/mmbtu to $13.93/mmbtu from 2000 to 2006

These swings in price can be managed by requesting a "lock" on the price of gas from your provider when market conditions are favorable

Beware, the Heat Rate volatility makes this product not recommended for risk adverse customers.

What product is available for my business?

Heat Rate and MCPE products are sometimes restricted by Retail Energy Providers for customers exceeding some minimum usage thresholds. You can use our "Get a Quote" process to determine what products are available to you from First Choice Power.