While the price of the plan that we pick for you is an important factor, even more, is when that contract starts and ends. If you're seeing a short-term rate that has a really cheap price, more than likely, it will put you out of contract during a bad renewal cycle. We're going to ignore that deceptive short-term gain and put you in a more favorable plan with a good renewal cycle.
In this article:
- How Energy Ogre chooses the right electricity plan for you.
- What is a good renewal cycle?
- It pays to be an Ogre.
We're now approaching what we call 'renewal season'. Since many of our members' contracts are coming to the end and we're going to be looking for their next plan.
This is also the time of year where many providers strategically offer low short-term plans (3 or 4 months) in hopes to entice customers who will then fall out of contract right before or during summertime when prices are generally at the highest of the year.
We here at Energy Ogre are extremely strategic when selecting each plan.
We know one frustration for many of our members is seeing low rates advertised for short-term contracts and not understanding why we've placed them into a longer-term plan with a slightly higher rate.
However, we're choosing plans that provide the most financial benefit for you throughout the year. Small savings now will almost certainly be lost, and then some, by the much higher rates right before summer. Getting you through the summer with a good rate is crucial for your overall savings.
To put it simply, we give up a little bit of upside to avoid a whole lot of downside.
Why we choose what we choose for our members
At Energy Ogre, one thing we're trying to do is circumvent the dangers of peak summer and winter. And we're way more concerned these days about peak summer with all that's been going on for the last few summers.
Again, a lot of times, if you're seeing a really good 6-month rate, the providers might want you to come out during a certain renewal cycle when rates are likely higher. Whereas, we know that it's a short term gain, long term loss scenario. anchor
What is a good renewal cycle?
Let's say you have a plan that's going to put you out of contract in the summer. Since the options for your next contract will be at a higher rate, it's going to be an unfavorable renewal cycle.
If we can find a scenario that spans the summer and puts you out in the fall, that's what we want to do.
Any plan that includes July and August is materially higher. So we have to put some more time in that contract to bring the weighted average down.
We're trying to avoid setting your rate during peak winter and summer. So over time, we try to get you into a renewal cycle that does just that.
What if I sign up for Energy Ogre in the summer?
The first thing we want to do is get you out of that summer renewal cycle.
If you're coming in during that time, we're gonna do the best we can for you, at that time. In this scenario, it's usually going to mean putting you in a shorter-term contract to try to get you in a better renewal cycle.
For example, if you sign up in August we won't put you in a 12-month plan if we can avoid it. Of course, if it's the best available plan for you, we'll have to do it. But, a lot of times the providers are already saying "Hey you're starting at the end of summer so prices are already lower." So what we'll do is select maybe a 4 or 5-month plan and then try to get you into another cycle that's putting you outside of that summer peak.
It pays to be an Ogre
Not only do we work with all providers offering competitive rate plans, but we are also keen to work with those willing to give a bit of their margin back to our members in a renewal contract.
The longer you're an Energy Ogre member, the more we are able to secure custom plans with below-market rates specific to how you use electricity.
Loyalty is always rewarded at Energy Ogre
These custom plans are structured to increase value for both the consumer and the provider.
A big part of that for the renewing provider is they have a massive incentive to get an Energy Ogre member to stay with them. Retaining a member is cheaper than acquiring a new one.
That incentive is cost-saving.
Now, we're always going to run your usage profile against the full market and always work to get the best possible price outcomes.
However, renewing providers have figured out that, with Energy Ogre members, they don't have to run a credit check again. They know their bills will be paid. There is an existing cash flow with them and the provider doesn't have to go remarket.
So, what we've said is "Share some of those savings with our members and you get the renewal because they're getting the best outcome." So they give us their best possible rate. We load it in and run it against what we're seeing in the market, and frequently it's the cheapest rate for that member.
How are we predicting what energy prices will be throughout the year?
We look at all the historical pricing we've had. Both the wholesale pricing for the past 10 years, and the retail pricing over the last several years as well. We also look at forwarding gas prices. Then, we basically generate a model of prices and what they're going to look like next year.
The caveat to that is we don't always know what prices are going to look like in the summer. And the reason is we've entered into scarcity pricing. Scarcity pricing is where like in August what we saw as we were turning on more and more expensive generation to keep up with demand and that caused more and more expensive prices. We actually got to the point where we ran out of generation and the price of wholesale electricity reached over $9.00/kWh.
So when we build out that forward curve, we also try to place a premium in there for July and August realizing that those prices will be much higher.
What can members look forward to in the future?
We're planning to put more data in front of our members. Part of the ultimate goal is to have your historical usage easily accessible, which will allow you to forecast certain changes that you might make to your home beforehand. For instance, a swimming pool or an electric car. We've finally gotten the infrastructure that we need to do that. So be on the lookout for updates as we release these new features
To summarize, there are a lot of plans out there right now that may seem like a great deal. But the fact is, we've vetted them ALL. We are also analyzing custom renewal plans with your current provider. Whichever plan is the most beneficial for you, that is the one we will choose. And to back that up, we are always happy to run a comparison if you send us the EFL (Electricity Facts Label) of a plan you believe may be lower.
Questions or concerns? Drop us an email!
Not an ogre yet?! Learn more here!