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3 Ways to Improve your Energy Procurement Process

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Kelly Curtis's picture
Managing Partner Discovery Energy

Managing Partner of sister companies Discovery Energy and Energy Auction Exchange, a Utility Auditing firm, and Energy Advisory firm, providing energy management and consulting for national...

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  • Feb 3, 2021
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3 Ways to Improve your Energy Procurement Process

Buying a commodity sounds like one of the easiest things to do in the land of buying things.  Energy is no exception.  Is one supplier's electricity any better than another’s?  Sure, you could compare the generation mix of where the electricity comes from (solar, wind, coal, etc.), but at the end of the day, it will all turn the lights on, and power your equipment the same.

So why can the procurement process of buying energy seem so complicated? I’ve been in many areas of energy for years, and I can tell you that more people know what a gigabyte is than a kilowatt.  Why is that?  Well, energy is largely taken for granted.  In a country with grid reliability like the US, we just expect stuff to work, simple as that.  I bet in Haiti, they know what a kilowatt is, and what it would power.

There’s also a big divide in our country as to the ways you buy energy as a business.  For the regulated areas, your utility is a regulated monopoly, and you don’t have a choice to buy your energy from anyone but the utility defined by your location.  When you don’t have a choice, why would you become educated in the nuances of your electric bill and what all that jargon means?

Then there’s the areas of the country that are deregulated as to the supplier of your energy, which gives you a choice of energy suppliers.  Most of these businesses engage in the practice of procuring their energy at the best price they can find.  But still, there are many blindspots in the art of procuring what seems to be a simple, commoditized product - energy.

So in the spirit of simplicity, here are 3 easy ways to improve how you are buying your energy - specifically electricity and natural gas.

First - Shop your energy supplier EVERY renewal.  You might know who your energy supplier is, and you might have a good relationship with them.  And that’s great if you like your company, and just want to keep your business with them - BUT it’s costing you.  Your price is suffering. 

How many products and industries have the model that they give great deals to acquire a customer in the hopes that over time, the customer doesn’t notice price increases, or decides it’s too much of a hassle to switch providers?  I can think of more than a few: car insurance, satellite/cable tv, checking accounts - I mean, doesn’t it make you mad when your Direct TV bill keeps going up, and you can get the same service from another company for HALF!? But you do need to box up the old receiver and ship it back, cancel the service, set up the new service - yeah, it’s a pain.  Most people won’t do that, they’ll just endure the price hikes.

Energy is no different.  The pencils are sharpest when suppliers are fighting to win your business.

Second - Use an Energy Management company that is supplier agnostic to run your RFP.  It is a hassle to run a good RFP every time your contracts are up for renewal.  Using an energy management company that will run an RFP with all the major suppliers in your area, this can check the box of shopping your suppliers out AND having someone manage the process for you.  Most of the time, fees to the companies to manage the RFP’s are inclusive in your contract pricing, and can be lower than trying to run the RFP by yourself.  It’s saving time and money at the same time.  And if they are supplier agnostic, they bring you the best prices, never favoring the incumbent.

Third - Prepare for your renewal through a Utility Bill Audit.  Fixing the billing errors, reconciling tariffs and charges from the utility and suppliers can be a money saving endeavor.  But it can also help you prepare for your RFP renewal.  If tariffs are off, then your prospective pricing could be off.  If accounts have not been set up correctly to begin with, they will likely continue on the new contracts misclassified.  Some companies will do this as a service to their clients before EVERY renewal contract event.  It’s a great way to maximize savings on your bills, AND account management education before you renew.

The procurement process for your energy portfolio can be a simple one.  But know that if it feels complex and overwhelming, you’re not alone, and there are solutions.

 

Kelly Curtis is a Managing Partner of sister companies Discovery Energy and Energy Auction Exchange, a Utility Auditing firm, and Energy Advisory firm, providing energy management and consulting for industrial and manufacturing operations across the US for the last 20 years.

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