As a category manager, it’s my job to look for new ways to help CU members save money, and provide insight about making their indirect spend categories a little more manageable.
One of the indirect spend categories I get the most questions about is energy management.
So, let’s talk about energy management - the basics of the industry, why it is in your best interest to have a reliable program and partner, and how you will ultimately save the most money with that approach.
Energy Management 101
Businesses across the country experience very different energy price structures. Why? Because states regulate energy markets differently, which has led to a split into how some regions manage energy need.
In regulated markets, customers are obligated to buy all electricity supply needs from the utility. But they do have opportunities to ensure the absolute lowest cost structure by finding a partner, like Trane Building Advantage, that offers an “Electricity Supply Audit”.
Commonly referred to as “choice markets,” customers in deregulated markets are able to select the electricity supplier and product that meets their business needs. And, more than 50% of the U.S. population falls into this category.
However, this can be a complicated choice and includes a lot of different variables that drive the price of an organization’s monthly utility bill, including something called peak demand (kilowatts, or kW).
Introducing… Peak Demand
“One of the main things to consider when it relates to energy pricing for deregulated markets is that there are small moments in time called ‘peak demand’ that will end up costing your business on an annual basis,” notes Trevor Joelson, CU Energy Program Manager at Trane Building Advantage.
What is it exactly? Each summer, utility companies analyze real-time data of Commercial and Industrial (C&I) customers to determine the highest 15-60 minute time interval where the energy demand for a given locality is at its highest rate. This way, utility companies ensure that there is enough power to support the same locality at its peak demand.
And, just because your local area is peaking, it doesn't mean that your organization has to be at its peak energy usage.
Confused yet? Let’s break it down a little more:
On July 30th at 4:30 PM, it’s squelching hot outside and all businesses and homes are running their air conditioning at full blast, on top of normal business operations. If the system peaked, Company A would not only pay for the energy demand at that time, but would be assessed an annual, ratcheted charge in the future that’s based on their demand during that peak.
Now, Company A pays a high, peak demand annual rate, on top of their typical monthly energy consumption (kilowatt hours, or kWh).
Dollars and Sense
Given the example above, if your organization is trying to save money on monthly energy costs, the obvious answer is to somehow control your monthly kWh.
But, did you also know there is a way to make the peak demand rate fall in your favor?
Peak Load Management Services
Many energy management companies offer a peak load management service that provides intelligence into when these peaks are going to happen.
“At Trane Building Advantage, we are able to narrow down the peak demand window to a small timeframe, and at that point we let our customers know so they can take energy reduction measures,” adds Trevor. “Now, even though your local area is peaking, your business is not, which means you see annual cost savings.”
Sound too good to be true? Luckily it isn’t and we can show you how to do it.
The CU Energy Management Program
The Corporate United Energy Management Program is a comprehensive solution that addresses needs in both regulated and deregulated markets through:
- Electricity & natural gas procurement services
- Energy market intelligence
- Rate reviews & audits
- Data management services
- Consulting services
- Pre-negotiated peak load management offering
Questions? Ready to get started? Contact us today for more information.
Matt Narens: Manager, Category Development at Corporate United
In his role at Corporate United Matt works with both CU members and supplier partners to ensure that the programs he manages are delivering maximum value. This includes everything from commercializing new offerings to conducting category lifecycle and supplier relationship management. His efforts are focused on minimizing the administrative burden and reducing the total cost of ownership related to indirect spend for Corporate United members. They also include aligning strategies with Corporate United’s supplier partners in order to best meet the needs of the market.