Once you understand the mechanics of procurement, the next question is strategy: how do you actually buy to get the best outcome for your risk tolerance? This guide covers the buying strategies commercial organizations use — and when each makes sense.
Start with your risk posture
Every buying strategy is an expression of how much price risk you're willing to hold. Define that first: some organizations cannot tolerate budget surprises, while others can absorb volatility in exchange for potential savings.
Core buying strategies
Full fixed
Lock 100% of expected load at a set price. Simple and predictable, ideal when certainty is paramount.
Layering (dollar-cost averaging)
Fix portions of your load at different times, averaging your price and reducing the risk of committing everything at a market peak.
Block-and-index
Fix a baseload 'block' of predictable usage while buying the variable remainder at index. This captures stability where you have it and flexibility where you don't.
Managed/portfolio
For large or multi-site buyers, actively manage purchases across time and locations against defined triggers and budgets.
The role of timing
Forward electricity prices change constantly. Buying during a favorable window — rather than only when a contract happens to expire — can meaningfully improve your outcome. This is why year-round market monitoring matters more than a single annual shopping event.
You don't have to time the market perfectly. Layering exists precisely so you don't have to make one all-or-nothing bet.
Look beyond the commodity rate
A low commodity rate won't help if demand and capacity charges dominate your bill. The best buying strategies pair a smart commodity approach with load and demand management to reduce the peak-driven costs behind the scenes.
Common mistakes
- Treating renewal as a once-a-year event instead of monitoring continuously.
- Making a single all-or-nothing purchase decision.
- Optimizing the commodity rate while ignoring demand and capacity drivers.
- Choosing a term length without a view on the forward market.
