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IEU-Ohio
Samuel C. Randazzo, Counsel
21 East State Street, 17th Floor
Columbus, Ohio, 43215
phone 614.469.8000
fax 614.469.4653
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Checklist for Making Energy Choices

 

 

Information: Know your business' energy usage

 

  • Identify and become familiar with basic industry jargon and acronyms
  • Collect consumption information
    • Twelve months of billing information for each load, identifying the kilowatt hours (kwh) used each month
  • Know your electricity demand
    • You want a graphic representation of the load, i.e. a chart or profile of the maximum amount of electricity needed for the business in a particular time frame, often a 24 hour, 7 day a week profile for 12 months.
    • Request this information from your local distribution utility
  • Review location-specific energy information
    • Identify and collect:
      • manufacturing cycles that are difficult or costly to re-start
      • seasonal peak production periods
      • seasonal manufacturing time frames
      • power quality concerns: at which critical times must the electricity be delivered evenly, consistently, with no blips or interruptions?
      • other times, additional requirements for electricity specific to a location or process
    • Identify supply alternatives, e.g. bypass, generation, etc.
    • Evaluate current supply strategy, sourcing information
    • Examine supply flexibility, e.g. a pricing portfolio that allows you to manage market opportunities; to improve reliability; to achieve maximum protection at minimum cost
  • Identify business options around electricity usage: examine your side of the meter (i.e. "demand" side) and how to mitigate exposure
    • Load shifting possibilities
    • Process changes
    • Seasonal or schedule changes
    • Interruptible load(s)
    • Equipment cycling (e.g. HVAC)
  • Determine your business' energy approach
    • Develop RFQ, RFP
    • Evaluate based on your needs
    • Know your alternatives
    • Negotiate contracts to maximize options

 

Objectives: Know your business' energy objectives

 

  • If you don't know, any energy "deal" from any consultant will work!
  • Consider these objectives: which ones fit your business needs?
    • Reduce supply costs
    • Build flexibility into supply system (to take advantage of market)
    • Build sourcing options (to attain competition)
    • Reduce usage/demand
    • Manage total energy package
    • Select supplier of choice
    • Use "clean" sources
    • Combine/consolidate energy centers
    • Outsource energy management, purchasing responsibilities
    • Determine best location(s) for business expansion

 

Assistance: Find qualified assistance

 

  • Seek other business people with energy management responsibilities
    • Talk to others at seminars
    • Work with trade association committees or interest groups
    • Identify larger businesses with energy buyers
    • Utilize supplier/customer chains
    • Join a group that focuses on energy markets, e.g. IEU-Ohio
  • Identify Assistance
    • Marketers and Suppliers: usually associated with one or more energy supply sources; objective is to sell commodity
    • PUCO: Electric suppliers must be certified through the PUCO. A list of certified suppliers is available from the PUCO.
    • Aggregation Pool/Buying Group: Aggregators who work with these groups must also be certified through the PUCO.
    • An "aggregator" may be an independent person or organization with the managerial, technical and financial expertise to form and manage an energy procurement program. Investigate pools that are forming through local governments, affiliate groups, suppliers, etc.
    • Independent Consultants or Brokers: an individual or firm with experience in energy procurement and energy management strategies. Tailors the energy recommendations to the needs and objectives of customers, not to the sales objectives of suppliers.
  • Question the Qualifications of "Assistance"
    • Organization: how organized? Who is parent company? Are there affiliated energy-related companies? Registered with, certified by the PUCO to do business in Ohio?
    • Background: What is the sales history and supply source? Who are clients of electric sales? Any ownership of generation? What are arrangements for access to the grid?
    • Experience: What is experience in managing facility supply and demand needs? Experience in manufacturing processes and the energy impact on them? Real time metering experience? On-site generation experience? Pooling small customers? Billing and contract review?
    • Knowledge, experience with financial tools?

 

Contracts: Read contracts; understand energy supply offers

 

  • Know what's in the fine print
  • Know your local utility's current "G" price ("G" price = generation) to compare
  • Look for and know contractual terms, conditions
    • Price: may be usage only or usage and demand based. Smaller customers will continue to pay a usage-based price, but may have a choice of pricing approaches.
      • "fixed rate": like a tariff, this is a set rate per unit consumed; considered a low-risk approach.
      • "guaranteed savings": using this approach, a supplier guarantees that your supply cost will be some percentage below the utility's price, e.g. 10% below the standard offer. This approach guarantees a savings off the local distribution utility price, and is also considered low-risk.
      • "variable rate": a contract offering this approach has a rate that varies by month (or specified time period) based upon market conditions. If the market price goes up, so does the per unit rate; if it falls, so does the rate. Can be compared to a variable rate mortgage, and is considered a higher risk approach. Experienced portfolio managers know how to minimize such risk, and can "lock in" a quantity when prices are attractive.
    • Length of term
      • most contracts will have a minimum stay clause, usually twelve to eighteen months; some are written for two to five years. Make sure you know the time commitment in a supply contract and that it is acceptable to your business. In a developing marketplace, flexibility is desirable.
      • the contract may allow for an "early exit" with a penalty payment or other conditions. Read the contract carefully to understand options or lack of options.
    • Supply options
      • "green" supply options may be available either through specific suppliers (e.g. GreenMountain.com) or as a part of a portfolio that includes some green source.
      • "green" energy is generated from solar, wind, geothermal, small hydropower or biomass (vegetation) sources.
      • green options are usually priced somewhat higher than other sources, e.g. coal, nuclear, etc.
      • Ohio's restructuring legislation requires that suppliers include "type of supply" and environmental information in billing information.
    • Special offers
      • Marketers sometimes package offers (natural gas, telephone, etc.) with special incentives for signing up, such as a give-away or a rebate to a charity or school. Electricity marketers may take similar approaches.
      • These incentives are most often appeals to emotion, not economics. Customers' dollars make up the contribution or rebate. Know what you're buying.

 

Education: Educate yourself about the changing industry

 

  • Educate yourself about the changing electric industry: find out what choosing your electricity provider can mean to your business
    • Attend seminars, workshops
      • Participate in the MEC Fall and February seminars
      • Contact trade associations to find basic sessions, e.g. Chambers, IEU-Ohio, OMA, NFIB, etc.
      • Contact utilities and suppliers
    • Locate information on how the market is changing
      • Check suppliers, the Public Utilities Commission of Ohio, utility and supplier web sites
    • PUCO (Public Utilities Commission of Ohio) web site:
    • Visit web sites that focus on educating readers on changing energy environments, such as:
      • http://www.ieu-ohio.org/: features information on Ohio's legislation, utility transition plans and competitive rules ordered by the PUCO, and links to other helpful sites;
      • http://www.facilitiesnet.com/: "Energy Decisions Magazine": features articles on energy topics, e.g. buying energy online; energy efficiency products; fuel cells; etc.
      • http://www.energyusernews.com/: "Training Series" features training modules to provide non-specialists with information on the basics of energy management. Some of the articles include power quality; energy information needed to make sound decisions; how to compare contracts.
      • http://www.ohioelectricchoice.com/: Part of Ohio's Consumer Education campaign, this web site features information and education specifically about Ohio's competitive marketplace, aggregation, how to shop, etc. Geared to residential consumers.
      • http://www.energymag.com/: Includes "Energy Manager Online" with articles available for download.
      • http://www.energybuyer.org/: Includes Topic of the Month, such as "Improving price leverage," "Hiring an energy consultant," and "Contract contingencies."
      • http://www.utilityguide.com/: Includes information on "green choices," "how electricity is produced," etc.
      • http://www.energysource.com/: Includes news and information on natural gas, electricity, propane gas, fuel oil and links to other sites.
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