How often should a business review its energy contract and procurement strategy? This is a question we hear frequently, and the simple answer is that businesses should review their energy strategy regularly, not just when a contract is about to expire. Changes in electricity and natural gas markets, capacity costs, energy usage, operations, contract terms, and business goals can all affect whether an agreement that once made sense is still the right fit.
Most businesses sign an energy contract, file it away, and don't think about it again until a renewal notice shows up. That's understandable. Energy procurement isn't most companies' core business, and let's face it, it doesn't just sound complicated, it can feel downright overwhelming. Lucky for you, we love this stuff, and it's what we do all day, every day. A contract that made sense 12, 24, or 36 months ago may not make sense today.
The grid has changed. The market has changed. Your business may have changed too. And with electricity demand growing and capacity costs remaining historically high in markets like PJM, an outdated energy strategy can create unnecessary cost or risk.1 2
Here are some signs it's worth putting your current energy contract under the microscope.
1. What Happens When Your Energy Contract Is About to Expire?
The most obvious trigger for a review is timing. When an energy supply contract expires, your service doesn't simply stop. If a new agreement hasn't been secured, businesses may roll onto a month-to-month, variable, or supplier-defined holdover rate, depending on the terms of the existing contract and the market. These rates may offer less price certainty and can change as market conditions shift.
Even if your current contract hasn't expired yet, waiting until the last minute to review your options can limit your flexibility. Energy markets move constantly, and starting the renewal process early gives you more time to evaluate pricing, contract structures, term lengths, and market conditions rather than making a decision under a deadline.
For businesses with multiple locations or contracts ending at different times, an early review can also identify opportunities to better align expiration dates and develop a more coordinated procurement strategy.
The takeaway: Your contract expiration date shouldn't be the date you start thinking about your next energy agreement. Reviewing your strategy well ahead of renewal gives you more options and helps ensure your next decision is intentional, not simply the result of whatever rate or terms take effect when your current contract ends.
2. Has Your Business Changed Since You Signed?
Energy contracts are built around the usage profile and business conditions that existed when the agreement was signed. Your square footage, equipment, operating hours, locations, production levels, and overall electricity or natural gas consumption can all influence what contract structure makes sense.
If your business has expanded, added a shift, opened or closed a facility, installed new equipment, increased production, or scaled back operations, your actual energy consumption may no longer resemble what it looked like at signing.
That mismatch can affect how well your current supply arrangement fits your operations. Changes in load shape, peak demand, volume requirements, or facility schedules may create new risks or opportunities that weren't present when the original contract was negotiated.
For companies managing several facilities, those changes can become even more important. A portfolio that has grown through acquisitions, consolidations, or new locations may benefit from reviewing whether contracts, expiration dates, and purchasing strategies are still coordinated effectively.
The takeaway: Your energy contract should reflect the business you operate today, not the business you operated when the agreement was signed.
3. How Have Energy Markets Changed Since You Locked In?
Even if nothing about your business has changed, the market underneath your contract almost certainly has.
Wholesale electricity markets are influenced by the availability and cost of generation, electricity demand, fuel prices, weather, and grid constraints. The U.S. Energy Information Administration continues to point to growing electricity demand, including demand associated with data centers, as an important factor shaping U.S. power markets.1
Layered on top of energy prices are capacity costs, which help ensure enough power resources are available to meet future peak demand and reliability needs. In PJM, those costs remain historically high.
PJM's most recent Base Residual Auction, for the 2028/2029 Delivery Year, cleared at the FERC-approved price cap of $325 per megawatt-day. While that is 2.5% below the previous 2027/2028 auction's $333.44/MW-day clearing price, it remains near record levels.2
Price isn't the only number businesses should be watching. PJM secured 138,318 MW of unforced capacity (UCAP) through the 2028/2029 auction. When 10,864 MW secured through Fixed Resource Requirement (FRR) plans is included, total available capacity reached 149,182 MW, still 6,831 MW short of PJM's reliability requirement.2
The recent auction trend puts today's environment into perspective:
- 2026/2027 Delivery Year: $329.17/MW-day
- 2027/2028 Delivery Year: $333.44/MW-day
- 2028/2029 Delivery Year: $325/MW-day
PJM's next Base Residual Auction, for the 2029/2030 Delivery Year, is scheduled for December 2026 as the organization works toward returning its capacity market to a three-year-forward planning cycle.2
For businesses in competitive energy markets, these changes reinforce an important point: a contract that made sense when it was signed may not reflect today's market realities.
That doesn't automatically mean an older contract is unfavorable. In some cases, a previously secured agreement may be protecting your business from today's higher market costs. In others, your contract structure may expose you to components of the market that have changed significantly. Either way, it's worth knowing where you actually stand.
The takeaway: Energy markets can change significantly over the life of a contract. Periodically reviewing your pricing, contract structure, expiration dates, and exposure to components such as capacity can help you understand whether your current strategy is still working in your favor and prepare you for what comes next.
4. Could Your Business Be Missing Demand Response Opportunities?
Your energy strategy isn't only about what you pay for electricity. For some commercial and industrial businesses, when and how you use electricity can also create opportunities.
Demand response programs compensate or otherwise incentivize participating customers to voluntarily reduce electricity consumption during periods of high demand, elevated wholesale prices, or grid reliability concerns.
The majority of U.S. utilities offer commercial and industrial customers some form of demand response option. The country's independent system operators and regional transmission organizations also sponsor demand response programs or allow qualifying resources to participate in energy, capacity, or other grid-support markets.3
Eligibility, compensation, operational requirements, and potential value vary considerably by market and facility. A manufacturing plant that can temporarily reduce noncritical production load, for example, may have very different opportunities than an office building or hotel.
If no one has evaluated your facilities for demand response, load management, or other market-based incentive opportunities, there may be value outside the energy supply rate itself that deserves a closer look.
The takeaway: A comprehensive energy review should look beyond your contract price. Understanding how and when your facilities use power can uncover programs and strategies that may reduce costs or create additional value.
5. Does Your Contract Still Match Your Risk Tolerance and Business Goals?
The lowest energy price isn't always the right energy strategy. A fixed-rate contract that once felt like the safest choice may no longer match your organization's appetite for risk, budget priorities, or operational needs. Conversely, an agreement with greater market exposure may feel less appropriate if your organization now places a higher value on budget certainty.
Your goals may have changed in other ways too. If your business has adopted sustainability commitments, renewable energy targets, carbon reporting requirements, or new expectations from customers and investors, your existing supply agreement may not include the renewable energy certificates, green power options, reporting support, or flexibility you now need.
Contract structure also matters. Businesses should consider factors such as pricing structure, term length, volume flexibility, pass-through components, capacity exposure, renewal provisions, and how the agreement fits into broader financial and operational objectives.
The takeaway: An energy contract review isn't simply a price check. It's an opportunity to determine whether your current strategy still reflects how your business operates, how much risk you're comfortable carrying, and where your organization is headed.
Where Pilot Energy Fits In
Pilot Energy helps commercial and industrial organizations evaluate energy procurement strategies, electricity and natural gas contracts, market timing, capacity exposure, demand response opportunities, renewable options, and other factors that influence long-term energy costs.
This is exactly the kind of review our advisors do every day. Rather than waiting for a renewal notice to appear, we help clients track contract terms, notice deadlines, expiration dates, usage changes, and evolving market conditions so energy decisions can be made proactively. We benchmark current pricing and contract structure against today's market, evaluate how energy usage has changed, and help businesses understand the risks and opportunities within their existing agreements. Because Pilot works across suppliers rather than representing a single supplier, our advisors can evaluate multiple contract structures and purchasing strategies based on the client's needs.
For businesses with internal energy, finance, procurement, operations, or sustainability teams, Pilot can serve as an extension of those resources. For organizations without a dedicated energy team, our advisors can provide the market expertise and ongoing support needed to manage an energy strategy from end to end.
A contract review with Pilot starts with a conversation. We'll review your current agreement, look at your usage history, discuss your goals and risk tolerance, and provide a clear assessment of where you stand. That may mean exploring a new supplier, adjusting your procurement strategy, identifying demand response or renewable opportunities, preparing for an upcoming renewal, or simply confirming that your current position is still working in your favor.
Either way, the goal is the same: help you understand what you're paying for, why you're paying it, and whether your energy strategy still makes sense for your business.
Bottom Line
An energy contract shouldn't be treated as a "set it and forget it" agreement, and you don't need to wait for an energy contract to expire to find out whether it's still working for you. A periodic review can provide the clarity you need to make your next energy decision with confidence.
Energy markets, business operations, electricity demand, capacity costs, and organizational priorities can all change significantly during the life of a contract. A strategy that was competitive when you signed may still be serving you well, or the market and your business may have moved in ways that warrant a new approach.
Reviewing your energy strategy before a renewal deadline gives your organization time to evaluate the market, understand its options, identify potential risks and opportunities, and make a deliberate decision rather than a reactive one.