Leveraging Business Changes to Manage Energy Expenses
A Curago Energy client that has been distributing industrial equipment for almost 60 years was experiencing growth. The company required more square footage and they bought an existing building with more space and features to help accommodate their business. To ensure a smooth transition, they timed the sale of their original site so they would have a few months of parallel operations.
We managed the energy procurement so they would have reliable, cost-effective electric and natural gas supplies at both sites during the transition. Curago reviewed the existing electric contract terms and conditions and identified an opportunity to secure better rates than those they could have assumed at the new facility. Since both sites were served by the same utility, we were able to work with electric utility and the un-regulated supplier to move the more favorable pricing our client had at their old facility over to the new building.
Options When Making Energy Procurement Decisions
The situation with natural gas was a little more complex as they changed utilities with the move. The old contract we had helped them transact was at a very attractive price; they could either assign it to the buyer of their old facility as part of the sale negotiations or cancel it with no termination fees.
The new building was on a variable utility tariff rate that was at a relatively high level due to recent energy price increases. They could continue with the high-level variable rate or switch to a new 1, 2, or 3-year fixed price supplier contract. However, the same market dynamics causing the high-utility rate would have impacted a longer-term fixed price as well. We believed that the market prices would fall.
We advised the customer to remain with the utility for a couple of months until they could lock into the much more attractive fixed price and receive a reduction in their budget. In addition to fluctuations in market prices, changes frequently occur due to regulatory and legislative changes that impact both rules of engagement and prices that customers pay. Energy pricing has a lot of moving parts. With the customer focused on their own day-to-day business, we simplified these issues for them so they understood their options and our recommendations. Once decisions were made, Curago took the necessary actions to keep them on the right track toward effectively managing energy risks.
These are powerful benefits to working with energy procurement professionals who have a history of doing things “the right way.”