Demystifying Multifamily Energy Procurement

A lot has happened to the energy management market in the last 20 years. A few decades ago, pricing was steady, except for when utility companies filed for an increase because they didn’t achieve a desired rate of return over time. As they frequently went to the well, the game began to change. State legislators enacted legislation to deregulate the industry and to introduce competition that forced better pricing. Today, several states offer competitive energy procurement options. Because not all markets are equal, deregulation, despite its intended benefits, has presented a complex energy buying process for residential and commercial customers. Various factors, from weather to changing regulations to customer demand and supply, now dictate pricing from one region to the next. Some can be forecasted, but others cannot. Weather is a predominant driver of energy costs, and the threat of a Blue Norther or heat wave can have an adverse effect on the cost of a kilowatt hour or therm. Each geographic region has its own characteristics, market rules and environmental regulations. Multifamily not always on a level playing field Energy is very much a commodity that is bought, traded and sold on the big boards and subject to pricing volatility. Energy markets work like stock markets and change every minute, energy specialists say. Energy procurement requires specific knowledge.. Multifamily isn’t always on level ground with commercial businesses and residential neighborhoods. “There are challenges in the energy buying process,” RealPage Vice President, Energy Management, Dimitris Kapsis says. “It’s very complex. It’s a very active market and always changing. There is volatility in the markets, especially in New England where there are capacity issues.” Compounded with market nuances that determine rates, establishing a favorable energy procurement process can be hindered by not understanding contract language or...