Chapter 3: How to Choose the Most Effective Energy Procurement Plan for Your Business

There are a few key steps involved to ensure you choose the most effective energy procurement plan for your business, namely:

  1. Assessing your current energy needs and creating an energy portfolio.  

  2. Outlining operational demands and goals.

  3. Determining your company’s risk tolerance.

  4. Reviewing local plan options.

  5. Assessing which companies can best serve your energy portfolio needs.

  6. Determining how involved you and your staff would like to be in day-to-day fuel and power oversight.  

Assess Your Current Energy Portfolio

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Your commercial energy portfolio includes all the fuel types necessary to run your operations as well as their load or usage amounts.

It's essential to understand your energy portfolio. Review usage reports, then compare the number of vendors, invoices and delivery schedules you're managing across all current energy accounts.

An effective energy procurement strategy streamlines both core and auxiliary fuel functions. One way to streamline energy management is by working with a vendor who can supply both those core and auxiliary fuels. Using only one energy vendor means saving employees' time and talent, reducing headaches and simplifying back-office work.

Energy procurement managers have a leg up when assessing their organization's energy portfolio. Their daily responsibilities mean fuel is already on their minds. Below are a few examples of how energy procurement managers play a vital role in assessing a company’s energy portfolio:

  • Fleet managers: Your energy needs could include custom cardlock fueling, fuel storage tanks, mobile fleet fuel management, bulk fuel delivery, low and ultra-low sulfur diesel and more, the management of which can be drastically simplified through a commercial vendor.

  • Purchasing managers: Wholesale fueling options mean natural gas, gasoline, propane, biodiesel, off-road diesel, #2 heating oil and more at more affordable price points.

  • Facility managers: Source everything from HD-5 propane deliveries and storage to more affordable natural gas and heating oil from a potential single, full-service vendor.

2. Outline Operational Demands and Goals

Want to trim equipment down time by 15 percent? Increase fleet delivery speeds by 10 percent? Increase product outputs by 25 units per production run?

Now that you have a deeper understanding of your actual business goals, look at them through the lens of your energy portfolio. How can smart energy strategies help you achieve those operational goals? You’ll likely find they fit neatly into one (or both) of the following buckets:

  1. Minimizing Costs: Effective energy procurement can translate into greater cost controls and more visibility into cash flows. Fixed or capped prices billed in monthly installments allows more predictive energy budgeting.

  2. Maximizing Revenue: Effective energy procurement strategies can lead to improved products and services that boost your brand. Better fuel management assists with higher order and delivery fulfillment rates while reducing operating costs, which generates higher profit margins per order or transaction. Quicker order fulfillment and deliveries create more satisfied customers and partner vendors — a recipe for repeat profits.

3. Determine Your Risk Tolerance

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Consider whether your business can trade higher energy costs in some months for serious savings during others. What price volatility or energy-service disruptions can your business afford, if any? Review these questions with business stakeholders or contact an energy broker to help walk through your custom risk profile.

4. Review Your Plan Options

Begin shopping for private or energy retailers who can service your area. If you used an energy broker during your portfolio or risk tolerance assessments, they may be able to help you vet local energy vendors.

Ensure you're checking your current utility contract while you shop for prospective energy suppliers. Review for its termination or expiration requirements and begin formalizing a severance plan.

5. Ask Who Can Best Serve Your Needs

Vet a handful of energy retailers in your area. As the energy procurement manager, you'll want to know:

  • Is the prospective energy vendor familiar with fuel assets and energy management in your industry?

  • Have they worked with clients like yours in the past?

  • Do they source the full range of fuels your operations require?

  • Can they prove their services will provide cost-savings over your current vendor?

6. Reflect on How Involved You Want to Be

Energy vendors alleviate the stress and headaches that come with energy management, helping take end-to-end analysis and decision-making off your plate. Vendors can do some or all the following management tasks depending on your desired level of service:

  • Review and recommend purchasing decisions based on market trends and analysis

  • Perform market forecasting

  • Run cost-competitive analyses

  • Generate consumption or load reports

  • Create load-forecasting programs

  • Coordinate on-site fuel deliveries

  • Streamline your billing procedures

  • Commit dedicated brokers or representatives to your account

Small business owners, COOs and CFOs saddled with C-suite responsibilities in industries with stricter energy compliance regulations, might prefer an energy partner with heavier day-to-day involvement. Likewise, fleet supervisors or purchasing managers whose daily roles already account for managing fuel workflows may prefer a vendor providing end-to-end support at an ideal price.

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Consult our industry guides for specific case studies on how to shop for the best energy procurement plan in your business' niche.

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