Buying energy can fall low on a company’s priority list due to the relative impact on an organization’s entire financial picture. Combine the lack of prioritization with the swiftly evolving (and confusing) energy landscape, and company’s experience inefficient use of resources and sub-optimal outcomes.

Each state and/or region has a different regulatory environment as it relates to buying electricity and natural gas. Each of these unique markets has various alternative energy suppliers that can sell you electricity or natural gas. Most companies will operate their various business units and/or facilities as independent profit and loss centers, which means decisions on buying energy are often made at the local level. This decision-making process creates missed opportunities for leveraging economies of scale as well as establishing consistency of contract terms.

Beyond the generally confusing nature of the rapidly evolving energy markets, most energy management firms/brokers/consultants are not transparent with how they get paid. Often times these firms will earn commissions from the alternative energy suppliers for the life of the contract you sign. These seemingly small dollars can add up to significant sums of money over time, and you should know what your vendor is earning off of your energy usage.

We are not in the business of predicting energy prices or markets, we are in the business of understanding your company’s financial risk tolerance and goals. Once we have a keen understanding of your priorities and needs, Foresight’s certified energy procurement specialists will conduct an agnostic, client-centric analysis of your organization’s energy procurement strategy.

We will help you understand gaps in your current strategy, and inconsistencies in contract length, terms, and pricing. We will identify areas you might be at risk, as well as areas you could be more aggressive. We will help you understand “industry lingo” and simplify complex contracts and buying strategies.

This report will show you alternative options you might not have previously considered, and ultimately empower you to make educated decisions moving forward. This consultative report is not a commitment to buy energy through our team (although we can do that), it is an unbiased approach to an industry full of biased experts.

• Independent analysis by unbiased industry experts
• Saves time for internal purchasing department staff
• Identifies areas for cost savings/mitigation
•  Identifies gaps in current strategy and demonstrates benefits of filling said gaps
•  Increased industry knowledge for your staff
•  Reduce energy and risk exposure

Client Profile
23 location manufacturing company with facilities in 13 states. In 5 states, electricity and natural gas are deregulated. In 4 states, only natural gas is deregulated. In 1 state, only electricity is deregulated. In 3 states, both electricity and natural gas are fully regulated. In total, the annual energy spend in electricity and natural gas was $14,000,000.

Before Foresight
Energy procurement decisions were made at the local facility level by a mix of facility, finance, and indirect purchasing staff. Some facilities located in deregulated markets had never explored procuring energy outside of their local utilities, some facilities had been on long term variable rate contracts with alternative energy suppliers, some facilities worked with energy brokers and others worked directly with suppliers. All in all, there was no strategic methodology across the portfolio of facilities, even though some of the facilities were doing an excellent job of managing the spend for their building.

After Foresight
The energy procurement consultation identified a number of cost saving opportunities, operational excellence initiatives, and best practice disciplines.

Highlights of the report included:
• A clear roadmap to getting all energy procurement decision-making happening in conjunction with corporate wide annual budgeting cycles, saving time for internal purchasing department staff
• Opportunities for aggregating across multiple facilities
•  Identified gaps in alignment as it related to risk tolerance and hedging
•  Introduction to new suppliers with more competitive pricing (upwards of 10% savings in some regions)
•  Introduction of renewable energy options when price competitive
• Recommendations on decision making process and flow to create more transparency
•  Education sections focused on de-mystifying various terms and conditions in energy contracts

Since 2015, Foresight has conducted over 2,000 energy procurement consultations across nearly every state. During this period, we helped our customers identify cost avoidance (and direct savings) of over $5,000,000.

Frequently Asked Questions

Electricity and natural gas will still be delivered to your building by your current utility provider. No new pipes or electric lines need to be installed. What you are buying is the actual commodity itself. You will still pay your current utility for delivery.

Different states have different rules and timeframes around this, but broadly the answer is yes.

No.

Energy brokers typically make their money by adding a commission on to the alternative energy supplier’s contract price. We typically do not build our contracts this way because our clients would rather pay us a fee as opposed to opaque commissions over multiple months and years. That being said, we will structure our contracts like an energy broker if that is what a client requests.

Energy consultants typically make their money by creating a fee structure around designing and executing RFP’s and RFQ’s for their clients. The majority of our clients engage with us in this manner. Despite having to pay the fee on the front end of an energy contract, our one-time fees are often 20-80% less cost to our clients than broker commissions would be.

Dozens, depending on the state/region your facility is in.

Absolutely. Alternative Energy Suppliers come in various shapes and sizes. On top of that, each supplier offers a variety of contract terms. Having knowledgeable experts work with your team to create a list of highly qualified and competitive suppliers across your portfolio of facilities will greatly save your team time and optimize outcomes.

Sometimes. The less energy your company uses, the more likely you will only get bills from your existing utility providers, even though you are buying the commodity from elsewhere. The greater your usage, the more likely you are to have separate bills from the alternative energy suppliers.

Your local utility who delivers your natural gas and/or electricity.

No, you have a lot of choice as to how long your contracts are structured.

Contracts typically range from 6 months up to 5 years. Renewable energy contracts through power purchase agreements can often be 10-25 years in length.

No. There are many different types of energy products. You can buy a variable product in which the price floats and follows the market. You can lock in or fix part of your energy load, or you can fix the price for the entire load. You will have the freedom to create a solution tailored
to your business needs.

It depends on how you define “cost effective”. Purchasing renewable energy almost always comes with a premium price, but many times the premium is very small relative to the benefits our clients experience from buying it.