How to Save Money by Switching Utility Providers

    

One of the easiest ways to save money these days is to switch utility providers. Recent increases in the cost of energy are astonishing and finding a competitive deal is a must. There’s hot competition in the utility markets with many companies competing on price alone, as services are otherwise the same across the board.

Apples to Apples

Current market conditions have opened the door to many new faces selling energy in NJ and PA.  The difficulty is to properly define all the ancillary costs in order to present a true comparison of your current cost and the true savings that will be realized during the term of the contract.

Hutchinson Business Solutions (HBS) is an independent energy broker and has been defining saving opportunities in the deregulated natural gas and electric market for the past 10 years. We represent all the providers selling energy in New Jersey and Pennsylvania.

10% to 50% Savings

Though each account is unique, many of the deregulated providers have what they consider to be their sweet spot (their most competitive market).

Because of our strong personal relationships with the providers we are able to more accurately identify the right provider/s for you.  This enables us to present a specific proposal outlining your current cost and all the deregulated utility opportunities available.

We understand your time restraints.  We have an excellent streamlined procedure that makes the whole process simple and easy.  All we need is a copy of your latest provider invoice with a signed letter of authorization, which allows us to pull the annual usages on your account(s).

All the savings fall to your bottom line

There are no costs associated with our service. We receive a small residual from the provider during the term of your contract.

To qualify, your monthly energy costs should be a minimum of $5,000 for electric and $3,000 a month for natural gas.

To find out more, email george@hbsadvantage.com or call 856-857-1230.

You may also visit us on the web to learn more about savings in the deregulated utility market. www.hutchinsonbusinesssolutions.com

Overpaying Telecom

 

 

 

 

 

 

 

By Andrew Backover

For 6 months, Nelson Human Resource Solutions paid $1,000 a

month for 80 phone lines that weren’t being used.

The staffing company also paid $600 a month for empty voice-mail

boxes.

Workers would switch offices and order new service. But they would

not disconnect the old service, Nelson says. The Sonoma, Calif. firm

only discovered the problem after hiring a consulting firm to check its

telecommunications expenses.

Many companies like Nelson are throwing money away as bills

skyrocket for telephone service, cellphones, wireless handhelds,

Internet accounts and laptops connected to networks.

The cost of telecommunications now ranks in the top five expenses

for most companies, up from about No. 10 a decade ago, companies

and consultants say. Companies spend 5% to 35% more than they

need to, experts say, because they pay for services they don’t use. Or

they fail to find the cheapest calling plans. They miss billing mistakes.

And employees make calls they’re not supposed to. As telecom costs

rise, so does the potential for excessive expense.

“The waste is enormous,” says Scott Schaefer, CEO of QuantumShift,

which helps companies manage communication services. “Every

single company that has over 100 employees is waking up to the fact

that (communications) is one of their largest expenses . . . and the least

understood.”

The expense isn’t minor. This year, U.S. businesses will spend an

estimated $403 billion on local and long-distance telephone service

and equipment. That is up from $274 billion in 1998, says the

Telecommunications Industry Association. In 2004, the total will

approach $600 billion, or nearly twice the Pentagon’s annual budget.

Financial services firms, where fast communication is key, spend an

average of $3,000 per year per employee — about five times the

amount of 15 years ago, says Bill Moore of consulting firm

PricewaterhouseCoopers.

In a time of layoffs and belt tightening, more companies are eyeing

telecom budgets, says analyst Maribel Dolinov of Forrester Research.

And no item is too small. Investment banking firm Salomon Smith

Barney recently suggested that its employees stop dialing 411, which

costs about $1, to get phone numbers. A handful of branch offices

have banned it. Consultants who help companies rein in telecom

expenses say most businesses waste money because of:

* Billing mistakes.

 

 

Last year, refrigeration equipment and laundryservices firm Mac-Gray upgraded its telecom network linking

regional offices in 11 cities with its Cambridge, Mass., headquarters.

But when AT&T upgraded the service, it continued to bill Mac-Gray

for the old service as well. Mac-Gray, with 500 employees and $150

million in annual revenue, failed to catch the mistake for several

months because the bill was so complicated, it says. The overcharge:

$75,000.

AT&T reimbursed Mac-Gray — but only after Mac-Gray hired a consulting

firm to handle its telecom services and to help with the dispute.

AT&T won’t comment on customers. But even it says billing disputes

are more common as customers buy more services.

Businesses aren’t the only losers. A billing error caused the county

government of Lee County, Fla. to pay $13,000 too much for longdistance

service over 4 months this year, says telecom management

firm Stonehouse Technologies. The money was refunded after the

problem was found.

How often errors occur is disputed. Consulting firm Rand Associates

says its business clients see billing mistakes on phone bills about 80%

of the time.

Often, tax-exempt organizations, such as municipal agencies, are

wrongly charged state or federal taxes, says Rand President Rudy

Richardson.

Also, computer systems that turn telecom services on and off aren’t

always in sync with billing systems. So customers might get billed for

several extra days of service, says John Gonsalves, vice president at

technology consulting firm Adventis.

Phone companies dispute that billing mistakes occur so often. The

Federal Communications Commission doesn’t track billing errors.

BellSouth, for one, says its bills contain mistakes less than 2% of the

time.

Regardless, it is up to customers to catch billing errors. And few businesses

go through bills line by line. The monthly stack of bills for

Nelson Human Resource Solutions stood 8 inches high. “There was

no one to analyze the paper,” says Chief Financial Officer Deborah

Mings. It now has QuantumShift handle its telecom operations.

* Carelessness.

 

 

Companies and organizations cannot always blamephone companies. Pricewater-houseCoopers had one client that paid

 

 

 

$80,000 in monthly service charges over 18 months for 36 cellphones

sitting in a crate in a warehouse. “It’s not that clients are lazy,” says

PWC’s Moore. “It’s simply impossible to stay on top of it.”

Eisai Research Institute, a drug research firm in Andover, Mass.,

thought it was on top of it when it banned employees from calling 900

numbers frequently used as sex, astrology and gambling hotlines. But

Eisai forgot to put the same block on its fax lines.

This year, in 1 month, an employee ran up a $1,300 hotline tab. The

company will say only that the worker wasn’t calling a sex line.

“That’s a perfect example of . . . (what) can slip through the cracks,”

says Eisai Treasurer Paul Drahnak. He expects Eisai to save $100,000

a year by turning its telecom operations over to a management firm.

* Inefficient contracts.

 

 

Because of an outdated long-distance contract,law firm Paul Hastings Janofsky & Walker wasted $300,000 last year.

The Los Angeles-based firm was in the middle of a 5-year contract

that charged 7.8 cents a minute. When the contract was signed, the

firm saw it as a good deal. But long-distance prices have plummeted.

Businesses now often get volume discounts in the 3-cent to 4-cent

range. Finding the best deal, and anticipating market trends was

beyond the 800-lawyer firm.

“We just don’t have that capability,” says Chief Information Officer

Mary Odson.

Likewise, hotel operator Windsor Capital Group estimates it was

paying $100,000 too much each year on maintenance contracts for

telecom and other technology equipment in its 24 hotels.

One California hotel, for instance, paid 40% more than a Colorado

hotel did for a maintenance contract on telephone switch equipment,

which allows guests to use the phones. The contract was negotiated by

hotel managers, who aren’t telecom experts.

“They are in the guest-services business,” says Windsor Capital Vice

President Sam Sansone. It has since hired outsourcing firm United

Asset Coverage to handle its maintenance contracts.

Complicated contracts

Buying telephone service used to be simple. Before the breakup of

AT&T in 1984, customers essentially bought local and long-distance

service from one company.

But the splintering of AT&T led to hundreds of long-distance

competitors, each clamoring for business customers with slightly

different deals.

In 1996, when Congress mandated more competition in the local

phone business, hundreds of tiny competitors started offering service.

And wireless service, once a luxury, is now a staple. In fact, 51% of

workers with cellphones say their companies pay at least part of the

monthly tab, says research firm Telephia. Also, companies are paying

to connect more employees to the Internet.

As telecom expenses have grown, companies have struggled to

respond.

Most large firms have designated employees watching over telecom

and computer systems. But in small firms, the chore often falls to

chief financial officers, who lack expertise. “Every company in the

world can’t afford to have an expert in house,” says Eisai Research’s

Drahnak.

Also, telecom expenses can be hard to track. For example, Internet

access charges might fall under the budget of a company’s information

technology department. But cellphones, often purchased by employees

and then expensed, might fall under travel budgets.

Consolidating bills can be hard, too. Law firm Paul Hastings has

seven U.S. offices. It buys telecom services from 24 companies. The

bills came in so often, at different times of the month, that they sometimes

got lost or sat on desks until they were late, Odson says.

Getting help

Last year, Odson handed management of the $1.8 million domestic

telecom budget to QuantumShift. Odson expects to save $700,000

this year. One big help? QuantumShift found it a better long-distance

contract.

QuantumShift’s software also searches for billing errors and unused

lines. It consolidates bills, which saves time, and lets Odson more

easily order new services. And it lets her analyze expenses to a single

phone number.

Even after paying for QuantumShift’s services, Odson expects

telecom costs to be about 26% less this year.

Companies that help others cut telecom costs are doing a brisk

business. Privately held QuantumShift had 116 customers as of June,

up from 45 the year before. It posted a 300% year-over-year revenue

gain in its first fiscal quarter. Stonehouse Technologies recently added

20 employees, bringing its total to 60. Veramark Technologies says its

outsourcing revenue has grown 30% in the past 10 months.

Phone firms, too, are trying to cash in. AT&T’s consulting arm

recently redesigned a customer-service system for First Union. It will

save the bank $38 million over 5 years, says AT&T executive Randy

Johnston. That’s because First Union’s customer service agents will

have faster access to more information, which means it’ll take less

time to handle customer calls.

Just as regular consumers can save money on phone costs by shopping

for calling plans that fit their needs and checking bills for errors,

companies can save money by taking simple steps:

* When billing errors occur, report them to the phone companies’

customer service team — not the sales team, says AT&T.

* Make sure disputes are noted in computer systems. That way, a

response is likely to be faster. Also, customers won’t have their service

turned off because they didn’t pay disputed bills.

* After ordering new service, ask for a detailed explanation of the bill.

Companies that don’t pay attention could find themselves in the same

place as Mac-Gray Chief Financial Officer Michael Shea.

“You wake up some morning and say, ’Holy cow. How am I spending

$1 million on communications,’ . . . and no one knows.”

Our Perspective:

This is an old article that appeared in 2001. As the old saying go, “The more things change, the more they stay the same. We see instances like this happening constantly.

How much are you paying for Telecom or voice and data services. I thinks this presents a strong case on why you should be looking at this now!

For more information email george@hbsadvantage.com  or call 856-857-1230

Learn more by visiting us on the web www.hutchinsonbusinesssolutions.com

 

 

Beware of Verizon Calls for Savings

Verizon is up to their same old tricks …

We have been getting feedback from our clients that they have been receiving telephone calls recently from Verizon representatives asking to review their bill and promising savings.

 First, they will ask for a copy of your bill so they can provide you with a comparison of your charges.  Here is the old “bait and switch”, the comparison is incomplete. The base line charge ($15.00 per line) is listed but what they don’t show you are more important — all the fees and taxes associated with those charges. All carriers must charge these fees and taxes. What initially looks like a savings is nothing but deception. To do an apples to apples comparison ask them to give you all the fees and taxes, as they would appear on your bill.

 Buyers beware …

They are also pushing an offer of unlimited calling. This is the hook. You need to drill down and look at each individual line and examine the calling patterns for each phone number you have and all past invoices. Most likely, some of these lines have minimal usage and you will end up paying more for this feature.

 We have seen several examples of inaccurate phone line count.  Verizon’s proposal only indicated 6 lines when in actuality the client had 10 lines. Obviously, the bottom line of the Verizon proposal was going to look much better to the client, until he receives his first bill.

 More than you expect …

If you receive a call promising savings from Verizon, don’t be fooled! Please give us a call and let HBS review the proposal for you. Otherwise, you may end up paying much more for your basic services based on a false proposal.

 Hutchinson Business Solutions is an independent voice and data solutions consultant. Thru our strategic partnership, we represent over 50 of the major providers currently providing these services for business. We provide a free review of your current services and will shop your account to our providers, presenting an overview of the current market opportunities available for your business.

 To learn more about finding savings in the deregulated voice and data market, contact george@hbsadvantage.com or call 856-857-1230.

Find out more information by visiting our website www.hutchinsonbusinesssolutions.com

Why Do Natural Gas Rates Change?

As reported by Public Service Commission of Wisconsin

HBS has been an independent energy broker for the last 10 years. Many times we are asked why the natural gas market can be so fickle and prices vary so widely from day to day. Below is an overview I found that may help shed some light on the subject.

Let us know your thoughts?

Consumers are sometimes surprised when they open their natural gas bills. The rate that their local utility charged this month could be 25 percent higher than it was just last month. That same rate, however, could at the same time be 30 percent lower than it was last year. This leads some consumers to wonder what is going on at the utility. The fact is that natural gas price changes are driven by several different factors, some of which the utility has control over, and others it does not. Some of these costs are subject to regulatory oversight while others are not. Some of these factors change infrequently and in small increments, while others swing widely from month to month. Still others vary by the season.

What causes natural gas price changes?

What is the wellhead price?

Why is the commodity price so unstable?

What do utilities do to insulate customers from volatility?

What are interstate pipeline costs?

Are pipeline rates constant from season to season?

How does increased winter usage affect pipeline capacity costs?

Are there other reasons that a natural gas rate changes?

What are local distribution service rates? 

 What causes natural gas price changes?

Changes in natural gas prices are caused by five principal factors. Natural gas rates change when there are: 1. Changes in the unregulated wellhead or commodity price of natural gas 2. Changes in the overall level pipeline demand charges approved by the Federal Energy Regulatory Commission (FERC) 3. Changes in the period of collection of pipeline demand charges approved by the Wisconsin Public Service Commission (PSC) 4. Special circumstances such as pipeline refunds 5. Changes in local distribution service rates approved by the PSC

What is the wellhead price?

The price of gas at the site of production is referred to as the commodity price or wellhead price. Of all the cost components, natural gas commodity prices are by far the most unstable and the least predictable. Figure 1 shows monthly wellhead prices of natural gas from 1999 to 2009. It is clear that these prices move around quite a bit from month to month and from year to year. Natural gas price volatility is among the highest of all commodities that are traded on major market exchanges. The price can unexpectedly double in a matter of months. It can also tumble by 50 percent just as fast.

Why is the commodity price so unstable?

The natural gas commodity price is so volatile because it is a market price, not a regulated price. Market forces reflect the underlying supply and demand situations. Since there is no regulatory oversight a sudden unexpected cold snap can send prices soaring. Conversely, an unexpected decline in the price of competing fuels, such as oil, can cause industrial customers to use much less gas than expected and the price of natural gas can decline precipitously. Figure 1 shows monthly prices. The daily prices are even more volatile.

What do utilities do to insulate customers from this volatility?

Utilities buy gas in the off-season and store it for winter use The principal method is to buy gas in the off-season and store it for winter use. The principal reason that storage services are used is because the pipeline system in our part of the country was designed so that a stored gas inventory is required if the utility is to satisfy its customers’ total demand. The resulting price hedging impact is, therefore, more of an ancillary benefit from the use of storage rather than the primary reason for using it. If gas is put in storage in the summer and withdrawn in the winter, the cost of gas charged to consumers in the winter will be a blend of the current market price and the cost incurred when buying in the summer. This blending tends to have a limiting effect on the price volatility to some extent. It is far from perfect insulation, however. When natural gas prices rise or fall dramatically, consumers will still see noticeable changes in their gas rates. Since on any given day Wisconsin gas utilities can meet only a fraction of their gas demands with supplies from storage, they are always buying relatively large amounts of gas at market prices. Therefore, even if storage services are used to their maximum capacity, market price changes always filter through to the prices paid by the ultimate consumers if no other action is taken. Utilities use financial instruments The other action than can be taken to reduce price volatility is a relatively recent development in natural gas markets. Futures, options, and swap contracts for natural gas traded on the New York Mercantile Exchange provide a means to hedge natural gas prices. Proper use of these contracts allows the utilities to lock in prices or to put ceilings on prices, for example, which limits the volatility of gas costs that flow through to consumers. The goal of using financial instruments is generally to control price volatility, not to speculate on the future direction of energy prices or not even to reduce gas costs. The utility’s cost of administering its hedging program is passed on to consumers so that, over a long period of time, a hedged gas supply portfolio will tend to produce slightly higher gas prices than if the portfolio were not hedged. The prices will, on the other hand, be more stable and more predictable. Whether the increased cost justifies the reduced volatility is a matter of personal opinion. However, more of the Wisconsin gas utilities have decided to use this approach as energy prices have become more volatile since 2000.

What are interstate pipeline costs?

Interstate pipeline costs represent the space (capacity) on the pipes, that transport natural gas. Pipeline costs are much more stable than are commodity prices. The overall level of pipeline charges changes very little from year to year. Occasionally, the FERC sets new pipeline rates that must be flowed through to consumers, but in most years the pipeline rates are fairly constant.

Are pipeline rates constant from season to season?

Generally no. The PSC requires most of the state’s gas utilities to recover more of its charges for pipeline service in the winter than in the summer. Why does the Commission do this? Increased demand in the winter, not the summer, determines whether the utility must contract for new pipeline capacity. There is plenty of space available on the pipeline in the summer so that even if everyone installs natural gas fired grills for summer barbecues, the utility simply runs more gas through its space on the pipe. So customers who increase usage in the summer cause the utility to incur commodity costs, but not pipeline capacity costs.

How does increased winter usage affect pipeline capacity costs?

The same cannot be said of customers who increase their winter usage. If numerous customers convert from, say, fuel oil to natural gas for home heating, the utility must make sure that it has enough space on the pipeline to meet the increased demand. If it does not, it will have to arrange for more space on the pipe. Who should pay for the increased pipe capacity, the customers who installed gas grills for summer usage or the customers who installed gas furnaces? Those that installed the furnaces clearly caused the need for the new capacity, so from a cost-causer / cost-payer perspective, those customers should pay for that capacity. To link cost-causer with cost-payer, the PSC requires utilities to use a seasonal pricing approach to collect pipeline costs. The concept is shown in Figure 2 below. The winter period runs from November through either March or April, depending on the utility. The important point to note is that pipeline charges increase by about $0.10 per therm on November 1. This is a hefty increase for most consumers. This means that even if commodity costs are stable from October to November, gas bills are likely to rise noticeably once October ends. Figure 2

Are there other reasons that a natural rate changes?

Natural gas rates can change due to reasons that occur irregularly. For example, in recent years several Wisconsin utilities were required to pass back to customers a refund of pipeline costs. Other utilities might be allowed to or required to pass on to consumers slight surcharges or credits based on their performance under gas cost incentive mechanisms. It is difficult to know when and if these types of costs might be incurred. In any event, they tend to be quite small relative to the commodity, interstate pipeline, and distribution service costs.

What are local distribution service rates?

These rates reflect the utility’s cost of maintaining and operating its local system for distributing natural gas to homes and business. It is surprising to many consumers that the portion of the business fully regulated by the PSC, namely the basic distribution business, is usually not the culprit when it comes to significant natural gas price changes. These costs are, like interstate pipeline rates, fairly stable from year to year. Unlike interstate pipeline rates, however, local distribution rates do not vary by season. These rates change only when the PSC has a formal rate proceeding for the utility. In most cases, these rates are not changed more frequently than once every two years.

**There are many factors that cause natural gas price changes We hope that it has been clear that there are numerous forces acting on natural gas prices. Some are market forces. Others are institutional forces such regulatory decisions by the PSC or FERC. The combination of all these determines the price that Wisconsin consumers pay for natural gas service.