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Understanding retail energy agreements

On Behalf of | Mar 4, 2024 | Business Litigation |

Running a business in New York involves entering into many different contracts. One of these contracts is a retail energy agreement, which is a legal contract between business owners and retail energy suppliers.

A retail energy agreement states the terms that govern how energy service will be delivered to your business.

Basic agreement terms

Although the terms of each retail energy agreement are unique, there are some common elements found in all agreements. Some of these include:

  • Contract length
  • List of accounts
  • Price or rate

Most retail energy agreements contain information about the length of the contract. Your contract should have start and end dates, as well as language about what happens after the end date if you want to continue the contract.

The agreement typically includes a list of all utility accounts that the energy supplier serves. Each account should be individually listed with its specific service address to avoid confusion.

The price or rate for electricity is another piece of information generally included in retail energy agreements.

Fixed or variable rates

You will likely be asked to select between a fixed-rate or variable-rate energy agreement. A fixed-rate agreement locks in the price while your price changes based on demand in a variable-rate agreement.

Depending on the size of your business, a hybrid energy plan might be best. This plan alternates between a fixed-rate and variable-rate.

With this type of agreement, you can choose to use a fixed-rate when the energy market is unpredictable and a variable-rate when it is stable. This agreement is usually a better choice if you are running a large business and spending a significant amount of money on energy.

There are several other clauses that you may add to your retail energy agreement, such as a swing clause. This is language that states how much or little energy you may use and still pay the same rate.

While this overview should be helpful before entering into your agreement, it is usually best to have it reviewed before signing.