Energy resellers
Many condo corporations take out long-term contracts with energy
resellers to lock in fixed prices for utilities, usually natural
gas and electricity.
When gas prices rise, the condo is protected from the increase in
prices. When gas prices drop, like they have been for the last few
years, the condos pay more for natural gas than they should.
What is little known is that the property management companies often
have ties with energy suppliers. Also there are "commissions" or finder
fees that the management company may receive when condos sign up.
Re-negotiating
contracts
If a condo starts hollering that the prices they are paying are far too
high, sometimes double what the gas companies are charging, the
re-seller may open the contract and reduce the price. However, this
comes at a cost as the re-seller will insist on the contract being
extended over
a longer period.
Cancelling the
contract
A condo that wants to get out of a bad deal will find that there are
very high penalties for cancelling the contract.
Value added?
The energy re-sellers don't own any part of the natural gas chain. They
don't own the gas fields, the pipelines, tankers or the distribution
centres. They pay the gas companies the going rate for gas and collect
a different, usually a higher, price from their customers. That's it.
Unlike building insurance, energy re-selling seems to me to me to hold
little long-term value to either condominiums or to individual home
owners.
The board decides
Most often the board will sign a contract with a reseller and often the
owners are not aware that this contract exists.
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