Energy procurement gives businesses the opportunity to proactively purchase energy in order to make strategic choices, in an effort to minimize energy costs. At Power Management, we understand how critical managing energy cost is to a company’s success. Procuring, or purchasing, natural gas and electricity can be confusing and time-consuming as business leaders are faced with trying to sort through the overwhelming number of energy companies now offering electric and natural gas supply alternatives. A thorough understanding of the underlying wholesale markets, power generation, delivery factors, economic and political influences and their joint impact on prices are all vital. For this reason, we act as an advocate on your behalf to leverage our strong relationships with nationally recognized and financially sound energy suppliers, to obtain the most competitive pricing and provide you with an all-inclusive approach to best manage your energy costs.
In states with deregulated energy markets, businesses have the option to select a third-party supplier to purchase natural gas and/or electricity. Deregulation allows consumers more freedom, and energy choice introduces the element of competition between multiple suppliers. Deregulation allows for businesses to pursue contracts and plans that may be lower, more strategic, or able to better protect against volatility than what the utility provides. The regulated utilities still continue to manage delivery, transmission and distribution.
“Power Management has acted as our sole energy management company for the past 10 years. The knowledge and support they have provided us through the years has allowed us to make strategic, competitive decisions in regards to our energy.”
Our energy procurement process starts with a discussion to learn more about your business; number of locations, hours, current agreements etc. Your account manager will then analyze and audit your utility invoices in order to get a clear picture of your energy usage profile and gather information needed for the pricing process. After reviewing your account information, our pricing department will negotiate pricing on your behalf with our reputable network of suppliers.
We will then present the best available options to suit your specific energy needs. Rather than initiating energy purchasing based on contract expiration dates or fiscal calendars, we monitor market dynamics day in and day out, and aim to identify the best possible time to drive your energy procurement. Once an agreement is in place, we will stay in touch and continuously monitor the markets for any advantageous opportunities that coincide with your strategy and alert you when those opportunities exist for procurement savings. During the course of your agreement, we can also provide invoice audits to ensure pricing accuracy and consistency.
The price of electricity per Kilowatt Hour (kWh) can fluctuate based on changes in natural gas and oil prices, weather, political events and other economic factors. In order to make an accurate comparison between the offers you receive, understanding what is or is not included in the price is important. Common components that comprise an electricity rate are:
• Energy: The cost of the commodity itself and the main component of your electricity supply. This will be what the supplier calculates to purchase the amount of power you need on the wholesale market for the term of your agreement.
• Capacity: This covers the cost to help guarantee sufficient generation will be available to meet the demand of the electric grid at all times.
• Ancillary services: Charges to ensure the that electric grid is functioning smoothly and there are reliable operations.
• Losses: Charges for the energy that is lost during transmission from the generation source to delivery at your business.
• Transmission: The cost to move power from the generator to your local receiving point.
• Renewable Portfolio Standards (RPS): Recovers costs if your state has implemented mandates that require suppliers to purchase a portion of their energy from renewable sources, such as wind, solar, and biomass.
Depending on the supplier, these charges may be included as part of the price quote, or they may be passed through as separate charges on your bill. A rate that does not include every cost component will be lower, however in the long run could be more costly. That is why it’s important to work with a company that has a good understanding about energy procurement and various supplier agreements and can better educate you regarding which product, offer and suppliers will work best for your business. In addition to the pricing components, considering your company’s risk tolerance, business goals and need for budget certainty can help determine if you are more comfortable with a fixed or variable pricing structure.
A fixed price allows you to lock in a set rate per kilowatt hour (kWh) over a designated time (contract term) for the generation portion of your electricity bill. Your monthly bill will vary based on your consumption, but the rate you pay per kWh will remain constant. This option allows customers who prefer price stability a higher level of budget certainty.
If your company is able to withstand the potential highs and lows in the market a variable price may be an option. This type of plan tends to work better for businesses with a higher risk tolerance as market rates are changing regularly based on supply and demand, weather and other factors.
Our electric energy procurement services are available to businesses located in many states including:
Natural gas prices can be affected by the amount of natural gas production, level of natural gas in storage, volumes of natural gas imports and exports, availability and prices of competing fuels, weather, political events and other economic factors. The price will generally be quoted in dollars per dekatherm (Dth), therm (Th) or dollars per million British thermal units (MMBtu). Common components that comprise a natural gas rate are:
Again, your company must determine if you are risk adverse or are able to withstand the large potential market swings.
A fixed price allows you to lock in a set rate over a designated time (contract term) for the generation portion of your natural gas bill. Your monthly bill will vary based on your consumption, but the rate you pay per Dth will remain constant. Again, this option shields businesses from large swings and unforeseen changes in market prices allowing for price stability
With variable priced contracts, your monthly natural gas price will fluctuate with the monthly NYMEX settlement price. There are also options to lock in a portion of the rate (basis) and your Account Manager at Power Management can monitor the markets for opportune times to lock in the remainder of the rate at a later time.
Again, this is a very general overview of the products offered and areas served that are available to businesses we work with. The benefit of working with Power Management for your business’ energy procurement is our unparalleled experience with various suppliers and market knowledge developed over the last 20 years. This expertise allows us to customize solutions for each client’s individual needs.
Our natural gas energy procurement services are available to businesses located in many states including:
Whether you have historically been directly with your utility for electric and/or natural gas supply, or have worked with an energy supplier in the past, you may be wondering what things to consider when switching energy suppliers. At Power Management, we take the stress of this process away by handling this for you. Because energy rates differ by customer, industry, supplier and location, understanding all of these caveats requires constant exposure to suppliers and their activities within each market. Our team of energy experts work day-in and day-out with suppliers to compare options on your behalf and search for ways to reduce your energy costs.
However, if you are looking to change or compare energy providers for your business, there are a few things you should keep in mind when evaluating a new company whether it be a direct energy supplier or an energy consultant company.
Although each customer is unique, the basic steps of PMC’s energy procurement process are the same. The results are competitive price options to fit your individual long-term energy strategy. At PMC we will keep you up to speed on market information throughout the year with our e-newsletters, and contact you well in advance to discuss renewal options.