Is Your Energy Strategy Making the Grade?

You recognize the savings you can get by going out into the marketplace for your business’s electric and gas usage, and have a contract in place securing your energy needs. But how do you know if that contract, and any other corporate energy activities or initiatives, are aligned and achieving your overall business goals.

There are a number of ways to evaluate your energy strategy and track performance. What determines a successful strategy can vary depending on your specific business goals and objectives. Below are some general questions to ask yourself.

Evaluating your overall energy strategy performance:

  1. Are your actual energy costs falling in line with your forecast and budget? Are you getting what you expected?
  2. Is your energy strategy in line with your corporate sustainability goals?
  3. Are you entering the market at the proper time? (this could occur a year or more before the end date of your current contract)

Evaluating your specific energy contract(s) performance:

  1. What were the fixed market rates available at the time of contract for terms not selected? During the term of the contract, what direction did the fixed rates move?
  2. If you selected a fixed price, how did that compare to the hourly ISO pricing for the applicable zone? Could a lower cost deal have been achieved through an index deal (provided your risk tolerance would allow for an hourly priced deal)?
  3. How does this contract compare against the applicable utility default/standard rate?

It is recommended that you review your energy strategy and procurement contracts on a regular basis, not just at renewal time. A good energy advisor will have the capabilities and resources to help you develop and monitor your energy buying strategy, provide on-going consultation on energy markets throughout your contract, and advise you on other services that can help you better manage your costs such as peak load management, energy efficiency, and renewables.

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About the author

Tom Dyer

Tom is the Senior Director of Procurement and Analysis for Usource. Tom has extensive experience in energy markets, developing and implementing unique solutions and innovative energy strategies, for some of the nation’s largest energy users across a variety of sectors and geography.