Holdover and month-to-month rates: what they cost a hotel that does nothing

What happens when the supply term ends?

The end of a supplier price term does not necessarily mean the hotel’s power stops. The agreement and applicable rules determine what follows: a renewal product, holdover formula, month-to-month service, another authorized arrangement, or a required action. Identify the exact provision before describing the hotel’s position.

The bills and costs hub separates physical service from supply pricing. A hotel can keep receiving electricity while the commercial price treatment changes. That continuity can make an overlooked expiration difficult to notice until the accounting team sees an invoice variance.

Read the executed contract, amendments, renewal disclosures, and recent notices together. Confirm the legal customer and account identifiers, since a portfolio can have several contracts with different end dates. The date on a spreadsheet is useful only if it matches the actual obligation and the supplier’s enrollment record.

What do holdover and month-to-month mean?

Holdover pricing describes the contractual price treatment that applies when an account continues after a stated term without an effective replacement under the relevant provisions. The label is not standardized enough to infer a formula. Month-to-month similarly describes a period structure, not necessarily the price basis or cancellation treatment.

Use this table to request specific answers, not to assume a standard national procedure. Commercial accounts can have negotiated provisions, and customer category can affect how rules apply. A familiar consumer shopping explanation may not cover a hotel’s agreement.

What can regulator shopping guidance establish?

Pennsylvania’s official fixed and variable rate guidance explains that a rate can change after a term expires and directs customers to their disclosure statement. This is useful evidence of the importance of reading post-term treatment. It should not be represented as a universal rule for every commercial hotel account.

The same regulator’s glossary distinguishes index pricing and other rate terms. A variable product tied to a specified index differs from a discretionary monthly price formula, even though both may be called variable. Ask the supplier which description fits the actual account.

Do not promise a specific notice period, penalty-free window, or cancellation right without checking the applicable commercial provisions. The hotel’s state, account category, load arrangement, and signed terms matter. When a material dispute turns on those details, obtain the relevant rule and qualified account-specific advice.

How do you calculate the cost of a supply gap?

Use the actual quantity billed during the gap and compare consistent product scopes. A simple calculation is gap kWh multiplied by the difference between the applicable holdover supply price and a documented comparison supply price. Delivery and other unaffected components should not be counted as avoidable simply because they appear on the same invoice.

Assume, for illustration, that 40,000 kWh fall within an unresolved post-term period. Assume the relevant supply price is $0.14 per kWh and the comparison price is $0.10 for the same included components. The difference is $1,600. These inputs are hypothetical and do not describe current offers or observed hotel results.

If the replacement could not actually have started at the beginning of the period, the full comparison is not an achievable avoided cost. Separate a retrospective arithmetic difference from a prospective decision. Include any legitimate fees or credits only when the contract supports them.

Why is there no universal penalty for doing nothing?

A supplier’s post-term formula can move with markets, include a premium, or follow another specified method. Total invoice changes can also reflect consumption, demand, delivery, or adjustments. The absence of a replacement plan creates uncertainty, but uncertainty is not evidence that every month-to-month product is necessarily expensive.

EIA’s electricity-price explanation provides context for market and cost drivers. Use it to explain why price conditions can change, not to calculate the hotel’s holdover rate. The actual supplier formula and service-period bill establish that rate.

Compare a deliberate short-term strategy with an accidental lapse. A planned short-term arrangement has a documented product, risk tolerance, review date, and responsible person. An accidental lapse often lacks those controls. The management issue is whether the exposure was evaluated and monitored, not whether a product has a particular marketing label.

What should happen when a lapse is discovered?

Collect the current invoice, executed agreement, expiry notice, and supplier account status. Ask the existing supplier to confirm the effective product, price formula, start date, and termination or replacement procedure. Request the answer in writing so accounting and procurement work from the same facts.

Then obtain appropriate replacement options with achievable start dates. Compare included components, term, usage treatment, and exit conditions. If a broker assists, ask how compensation is paid and whether it is embedded in the price or billed separately. Evaluate the complete proposal rather than replacing one poorly understood product with another.

Confirm enrollment acceptance and the meter’s actual transition date. A signed agreement is not proof that the utility has completed the switch. If a gap remains, include its expected quantities and formula in the energy budget until the new product is effective.

How are the first affected invoices checked?

Split the service period where necessary. A bill can straddle the old term, post-term treatment, and new product. Ask how the quantities are assigned to each period. Reconcile the calculation using actual data or the utility’s documented method, rather than assuming a calendar-month boundary.

Use the utility bill audit process for disagreements. Identify the disputed component and expected calculation, preserve notices, and confirm applicable payment and dispute procedures. A large increase warrants review but does not by itself establish that the supplier violated the agreement.

Keep other changing components visible. Taxes and riders can alter the invoice at the same time as a supply transition. Removing them from the comparison prevents a legitimate utility factor change from being wrongly attributed to holdover pricing.

What controls prevent the next unresolved expiry?

1. Record contract, notice, enrollment, and end-date obligations per account.
2. Assign one accountable owner and a backup contact.
3. Begin review early enough for data, offers, approval, and enrollment.
4. Keep notice addresses current through management and ownership changes.
5. Confirm the replacement’s actual start date with the supplier.
6. Check the first affected invoice and archive the final agreement.

Portfolio systems should track each meter rather than only the property’s name. A separate gas contract or annex meter can expire even when the main electricity account is current. Review the register when a hotel is acquired, renovated, or moved between management companies.

An orderly renewal process gives ownership a concrete choice with known timing and stated risk. It also gives accounting a defensible explanation when the bill changes. The objective is a managed supply arrangement whose price, dates, and responsibilities are documented before the old terms cease to apply.