Optimize your energy purchasing strategy with Usource’s customized process, backed by market intelligence.
Energy procurement is the cornerstone of any organization’s energy management plan. But before executing any purchasing strategy, it’s important to understand the market, identify your energy needs, and evaluate pricing options. Usource guides clients safely through these important steps.
Understanding the Market
To purchase electricity wisely, you must first understand the fundamentals of the electricity market.
- The electricity futures market is speculative and unpredictable. Pricing trends may continue or reverse.
- Prices are subject to change at any time in response to a host of drivers such as the economy, unexpected weather extremes, hurricanes, and regulatory and political events.
- The most advantageous buying opportunities open and close quickly, so it’s vital to continuously monitor the markets and strike on these market shifts to secure your energy pricing for the future.
Identifying Your Energy Needs and Capabilities
You should evaluate your business’s energy requirement and if you can tolerate fluctuation on your bill based on price movement. Consider the following:
- Budget certainty: Do you need predictable energy costs that will guarantee you come in on-budget, or are you willing to take on market risks and rewards?
- Ability to curtail or shift load: Can you change your operations to use less at different times?
- Your end product: Can you pass on the higher energy costs in your product or service?
Evaluating Pricing Options
Each of these pricing strategies hedges against inherent uncertainties. Each carries a different type of risk.
- Fixed Price
You pay a fixed price for energy for a defined period of time. Works best for businesses that require price certainty and budgetary control. 100% of the supply cost risk is on the supplier.
- Index Price
You pay the variable hourly price for each kilowatt-hour (kWh) of electricity consumed. Works best for businesses that can adjust their operations in response to changing hourly prices. 100% of the supply cost risk is on the purchaser.
- Block and Index
This strategy strikes a balance between price certainty and price variability. A percentage of supply is purchased on both a fixed and variable basis. Works best for large businesses that have the ability to predict and actively monitor and manage electricity usage.
- Managed Service
This strategy allows you to buy a percentage of your energy over time. Works best for large companies looking to secure budget stability over the long run. This option also allows you to maintain buying flexibility for market dips.
Executing Your Strategy
Usource’s proprietary technology, coupled with our deep market expertise, allows us to secure the best pricing available for our wide range of industrial, commercial, and institutional customers. As a Usource client, you receive real-time market intelligence, gathered and interpreted by a dedicated team of experts whose primary focus is to help you execute on the best energy buying strategy for your business.