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TMT: Choosing the Right Energy Product

Video Transcript

Let’s discuss risk. If we were having this webinar three months ago, we would be talking a lot about the cost savings versus your prior contract and how we hit some of the lowest prices in the last 20 years in February, which was just unheard of.

It would have been a very different conversation from today where we want to focus on cost aversion — avoiding any risk in the future given all the factors that we’re aware of today. Where we anticipate using those factors, where we anticipate energy prices to go, and what that means for you and your energy costs.

The biggest way to do this is through product selection. When a supplier uses “product” terminology, they’re basically meaning of all the moving components of your electricity or natural gas costs, how are you fixing those and what is the variability going to be from those month-to-month on your invoice?

Low Risk Tolerance Customers

So when we look at this meter, you see in that bluish-white area is for low risk-tolerance customers. You need a lot of budget certainty, you can’t have a lot of variation in the rate month-to-month, and you need to plan in advance for what’s coming down the pike. This would be more of a fixed product, or a fixed all-in. You’re taking all of the different components of your energy cost and locking them as much as possible.

When done correctly, you should in theory have the same per-kWh or per-therm cost on your invoice every month.

High Risk Tolerance Customers

If you go to the other side of the meter, you have the index or variable or floating type of products. These ride the roller coaster of the energy market. So you’re going to have a lot of variability.

There’s been some advantages to this certainly in the past year or two where prices have continued to come down continuously, so if you’ve been riding an index product you may have seen some of those record-low prices and been able to take advantage of that.

But on the flip side, now we’re facing volatility. And volatility, again, means a roller coaster. So if you have a little more bandwidth to have a higher risk tolerance, then this may be the kind of product for you.

Product type is going to look different for every organization. We’ve already seen where COVID-19 has affected every business (even within the same industry) very differently, and going forward a recession could affect every organization differently. So I would stress that you should really look at your internal risk tolerance — not only what it was in the past but also what it’s going to be going forward with all of the unknowns.

Current Energy Product Trends

A trend that we’re seeing right now is even some of our long-term clients that have always been on some type of float or index product are actually looking to fix as much as they possibly can. There’s a lot of uncertainty still up in the air. We don’t know a lot of things that are going to shake out from COVID and the recession and these other factors we’ve described.

So to be able to have control over a certain portion of your budget via energy, we’re seeing where people are starting to switch more to the fixed and low-risk types of products.

 

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TMT: Energy Challenges for Manufacturers

Video Transcript

Hi everyone, and welcome back to another Nania Energy Advisors’ Two-Minute Tuesday. I’m AJ Brockman, Nania’s Content Marketing Manager. Today we will be talking with Senior Energy Advisor and Mid-Atlantic Manager Mike Eckenroth about the specific challenges that manufacturers face when it comes to energy. So let’s get started!

Energy Challenges for Manufacturers

AJ: So Mike, when it comes to energy, what would you say are the top two to three challenges manufacturers typically face?

Mike E: Good question! I would say number one is probably how to reduce and control energy costs.

Manufacturing is typically an energy-intensive process. You’re taking a number of raw materials, putting them through your process, and converting them into what you want to make. And throughout that process, there’s a lot of energy consumed. So the concern is about how to reduce and control those costs to keep operational costs low.

Secondly, manufacturers want efficiency and confidence in their energy procurement, which isn’t always easy to have. There’s a lot of different choices available — brokers, advisors, consultants, suppliers and products — to choose from. Figuring out a process to determine which method to use for procurement is definitely a challenge.

Tips for Reducing Costs

AJ: And when you talk to manufacturers or decision makers in manufacturing, what sorts of tips or solutions to those challenges are they typically looking for?

ME: So to answer the second point, we did a broker versus advisor video a few months ago, so I recommend they check that out. But, really, it’s about finding an advisor or consultant that you trust and that sits on your side of the table.

You want them negotiating with suppliers on your behalf to achieve your goals. So you should feel that all of those things are being met by them, and I’d recommend interviewing a few different ones to get a feel of who has your best interests in mind and who you have the most confidence in.

Secondly, they’re looking to identify opportunities that they might not have seen otherwise. The number one way to do this is with an energy audit.

You have various operations that you’re doing day in and day out, and you might not realize there are opportunities in front of you for that. This could be things like LEDs or HVAC controls, variable frequency drives, water controls. An energy audit will identify those opportunities, and then we can prioritize those according to your ROI goals. So this is really about making you more efficient, doing more of the same output with less energy input, reducing those costs from that side.

Along that same vein is demand response. Demand response is a voluntary curtailment program during emergencies. So for a few hours of participation a year, a manufacturer could earn tens of thousands of dollars in payment for those.

This is particularly important for manufacturers because they usually have some control over when their energy is being consumed. They can schedule activities at different times and things like that, and so it’s typically a program that works really well for them.

And lastly is tax exemptions. This has been huge for manufacturers that we work with. Nania Energy is not a tax firm, we are not licensed tax professionals that can provide advice on taxes.

However, we’re aware of some exemptions that exist, and we can double check your bills for those. So if you are paying taxes and you shouldn’t be, that’s something we’ll be able to take a look at and either recommend you to one of our partnered tax firms or have you investigate it and recover that money (up to 48 months in some states) as well as remove that cost going forward. So that’s really low-hanging fruit that’s available for manufacturers.

Sustainable Manufacturing

AJ: Great tips, Mike. Lastly, I want to talk about green energy. Sustainability is starting to become more of a factor for both producers and consumers. What advice would you give to manufacturers who are interested in going green?

ME: So what we talked about with energy audits: even though it may or may not seem like that’s the easiest way to go green, it probably is one of the easiest. There’s a lot of wasted energy in a lot of different processes that manufacturers use, and there are ways to recover that. There are ROIs that are increasingly lower and lower to match those 2 and 3 year goals that some organizations have for that. So that would be number one: looking for those efficiency opportunities.

Number two is sourcing your energy with green power. Typically, energy supply agreements are going to be maybe 10 percent renewable, depending on your state or municipality. And there are opportunities for you to source 100 percent of your energy from renewable sources.

You do pay a little bit of a premium for it, but you’re talking about one to two percent, so it’s very manageable if green energy is a corporate initiative or an initiative for your organization. That’s definitely a way to achieve that.

And thirdly is on-site generation. This is typically a little less popular, mostly because you have to have the floor space or the space to dedicate to it. There are requirements, such as how long you’re going to be in the building, lease obligations, and ROI constraints that you have to sort through.

On-site generation is going to have longer ROI, but if you have the square footage or roof space to allocate to solar and you have a longer term that you’re willing to accept the ROI for, that’s absolutely something you should be looking into and could provide some of the results you’re looking for.

 

AJ: Great! Well thanks so much, Mike, for all of that great information. And thank you to everyone for watching our video! If you’re in manufacturing or you’re a decision maker for a manufacturing facility, tune in to our webinar on June 25th. We will be presenting some energy tips that are specific to you.

Thanks again for watching! If you found this video helpful, please like, comment, or share below.

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TMT: Is Now a Good Time to Buy Energy?

Video Transcript

Hello everyone! Welcome back to another Nania Energy Advisors’ Two-Minute Tuesday. I’m AJ Brockman, Nania Energy’s Content Marketing Manager. And today we will be talking with Senior Energy Advisor Mike Zaura.

We’ve seen a lot more market volatility recently, which has led to some clients asking us, “Is now still a good time to buy?” And that’s what Mike and I will be talking about in today’s video.

Recent Market Movement

AJ: So Mike, most states started putting COVID-19 measures in place in early March. What have the energy markets looked like in these past two months?

MZ: Thank you, AJ, for the question. Yes most states started those in early March, but we started seeing energy markets go down as early as the end of February. And as the chart shows here, you can see the steady decline.

Source: ino.com, New York Mercantile Exchange Natural Gas 3 month history

So that coincided with equity markets. As we all know, stocks went down quite a bit and everybody felt the pains of watching that happen.

But energy markets went down quite a bit as well. Now, while stocks and equity markets have recovered, the energy markets have not. They’ve recovered a little bit, but a lot slower than the equity markets.

So, while the energy markets are still down, there’s a lot of volatility still out there right now. A good example of this is what happened a couple Mondays ago. There was a pipeline explosion in Kentucky, and overnight and going into Tuesday morning gas markets spiked about 8.5 percent.

Now that’s volatility that’s not COVID-related, but it gives you an idea of some of the spikes that can occur and how the market recovers after that.

Is Now a Good Time to Buy Energy?

AJ: Okay Mike, let’s answer the question that’s on everybody’s mind. Is now a good time to buy?

MZ: An excellent question, and yes it is a good time to buy.  But, more importantly, it’s a better time to explore your options. A lot of the questions we’ve been getting recently are “With all the volatility going on, should I even think about buying? Should I wait? What should we do?”

If you explore your options, that’s one of the best things you can do right now. This puts you in a position to at least see what’s out there — you can see what rates and term options are available to you. Regardless of when your agreement is up, whether it’s a few months from now or the end of 2021, exploring your options now gives you ability to make a good decision on whether to buy now or wait.

What Do You Recommend?

AJ: What would you recommend to your clients today?

MZ: Exactly what I touched upon a little bit earlier: explore your options. In addition to looking at what’s available now, it also sets you up if you do decide to wait. If you’re willing to wait and are a little less risk adverse, then you are set up to take advantage of a little volatility in the market.

To give you an example, say the market goes down 3-5 percent on a given day. If you did explore your options, you’re already set up with suppliers with your account information and they have everything they’re looking for. If the market goes down, you can easily jump on an opportunity to grab those savings. You wouldn’t be able to do that if you weren’t set up earlier than that.

So exploring your options is the best recommendation. Maybe you’d see 10-15 percent savings right now, maybe 20 percent savings. What kind of impact could that have on you and your bottom line during these times? So you can act now by exploring. If you like what you see, great. If you have a little more time to wait on your agreement, that’s even better. You can take on a little more risk if you have the appetite for it and then jump on the market opportunity when it presents itself. Those would be my recommendations right now.

AJ: Well thank you so much, Mike, for all of that awesome information. And thank you to you all for watching! If you found this video helpful, please like, comment, or share below, and be on the lookout for next week’s Two-Minute Tuesday video.

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TMT: Energy Tips for Facilities and Operations Managers

Video Transcript

If you’re a facilities manager, Director of Operations, or COO, you deal with almost everything happening at your facility on a daily basis. And if you oversee more than one facility, your tasks and responsibilities are even greater.

In this week’s Two-Minute Tuesday, we’re going to dive into energy concerns specific to you and share some energy tips for facilities and operations managers that make the process easier for you.

Concern #1: Ease of Procurement Process

One of your concerns is that you need the procurement process to be as easy as possible.

With all you have going on, you don’t have time to sift through mounds of paperwork or charts or spend hours considering every option.

To make the process easier on yourself, consider working with an energy broker or an energy advisor.

They’ll do the heavy lifting for you — requesting pricing, communicating with suppliers, and comparing supplier offerings. Based on their findings, they’ll give you a proposal that clearly states their recommendation based on your facility’s needs.

Concern #2: Efficiency

You also want your facility to be operating as efficiently as possible to reduce your bottom line. Old or outdated machinery could be using more energy than necessary and causing you to be over budget.

To combat this, have an audit performed on your facility to identify possible inefficiencies. The audit will identify both immediate and long-term opportunities for you to lower your energy usage.

And as an added bonus, many utilities currently offer efficiency incentives, reducing your overall project cost.

Concern #3: Budget Adherence and Risk Avoidance

Another important aspect of your job is making sure you’re adhering to your budget.

Can you explain to your CFO why your projected energy costs were ten percent over budget? Are you sure it was due to increased production? What if it was something else?

Taking unnecessary risks with your energy can easily blow up your budget, and you don’t have time to examine the details of every available energy product.

An energy advisor or broker is well-versed in supplier product options and can help you select the one that makes the most sense for your facility. This should be based on your production schedule, sustainability requirements, and any upcoming energy efficiency projects.

Concern #4: Looking for Competitive Advantages

Lastly, you’re looking for ways to give your facility a competitive advantage.

In addition to a strong procurement strategy and doing efficiency projects, consider enrolling in a Demand Response program.

Facilities that choose to participate earn money for voluntarily reducing their usage during test events and peak usage times. The more you can curtail, the higher your payout, and the more funds you have at your disposal for site upgrades.

 

As a facilities or operations manager, you deal with so many variables every day. Your energy consumption and spend is an important aspect of this, but it doesn’t have to be overwhelming.

Keep these energy tips for facilities in mind when looking at your next project or agreement.

Thank you for watching! If you found this video helpful, please feel free to share it with other operations folks, then like or comment below.

Deregulated Energy Markets – Ask An Advisor

Energy advisors, brokers, and consultants all operate in deregulated energy markets.

In today’s video, we’re going to talk about deregulation. I’m going to ask John some questions and we’re going to have some conversation about deregulated energy markets.

What does “energy deregulation” mean?

MZ: So John, when an energy market is deregulated in a state, what exactly does that mean?

JN: Let me turn back the clock a little bit. So back in the late 1980’s, the federal government allowed states to implement what they called “Choice” for natural gas. But it was up to each state to decide whether they wanted to do it or not.

That experiment produced extraordinary results in the states that implemented it. And the savings that the end users — mostly large commercial — realized was dramatic.

Then, in the late 1990’s and early 2000’s, the federal government deregulated electricity in much the same way. Each state got to choose.

So today, roughly half the states have deregulated natural gas, and probably one-third of all the states have opportunities where end users can purchase electricity in their deregulated market.

Choosing Electricity and Natural Gas Products

MZ: So when you talk about purchasing electricity, we talk to our clients about different products whereas you don’t really get a choice with the utility. Talk a little bit about product mix and what products are available in deregulated energy markets.

JN: Well, if your business or home resides in a deregulated state, with gas and electricity you have the ability to purchase them in different ways.

There’s what we call “floating market” or “spot market” and you could also fix a price for some duration, whether it’s for three months or even out as far as ten years.

If you’re using the utility — whether it’s a default service in your state or your state doesn’t offer choice — the utility almost always provides some kind of variable rate. It is subject to the market and subject to change.

So the products that have been created over time in response to how the utilities provide their prices are generally around fixing a rate. Fixing a rate is the tool that probably 95 percent of customers in deregulated markets use.

MZ: And part of that product mix, too, is green energy and sustainability. Can you talk about that?

JN: When consumers have choice in deregulated markets, it’s proven not only to provide savings but also budget certainty. That means that customers now know roughly what their total cost is going to be for energy.

But a newer reason why people want to be in deregulated markets is that they can choose whether they’d like to go green or not.

Unfortunately, there are not many green options for natural gas — it just doesn’t exist that way. But in electricity, “going green” means that you could be buying your electricity from a renewable source — like solar, wind, water, or waste.  By doing so, you’re aiding the environment.

These are generally not options that you have when you’re operating in a regulated market.

MZ: We’ve helped a lot of our manufacturing clients achieve their sustainability requirements by buying Renewable Energy Credits (RECs). In these deregulated markets, people have been asking about RECs a lot more recently as well.

Which states have deregulated energy markets?

MZ: Some of the states or areas of the country are deregulated. Would you mind talking about which ones?

JN: What we saw with natural gas is that the states that were heavily populated with manufacturing were the

States with deregulated energy markets

States with deregulated energy markets

first ones to adopt deregulation. So think about the Midwest and the Northeast. Since natural gas has been deregulated longer than electricity, it has spread a wider net.

So about half of the states in the nation have opportunities end users — whether it’s for commercial, residential, or both — to choose for natural gas.

On the electric side, probably 13 or 14 states are offering choice. Again, a lot along the Midwest to Northeast corridor, California, and certainly Texas which is the biggest market by far.

Benefits of Energy Deregulation

MZ: So, obviously, states have deregulation available. We get asked all the time by customers about why their state isn’t deregulated. What are some of the benefits that you see to deregulation?

JN: Well, the evidence is absolutely conclusive at this point. The end users in states that have implemented choice have realized lower costs.

The best example is Illinois versus Wisconsin. Illinois deregulated electricity early in this process. Wisconsin never deregulated. Before deregulation, businesses were leaving Illinois and flocking to Wisconsin because they wanted to take advantage of the lower electric rates.

That has since ended. Wisconsin’s electric rates today on average are probably 20-30 percent higher that what they are in Illinois. Being neighbors, we source our power from the same places. Nothing else has really changed. The only thing that has is the fact that Illinois offers its businesses and homeowners choice, and in Wisconsin they don’t.

Downsides of Deregulation

MZ: Sure. And some other big advantages besides the lower prices are product mix like we talked about and budget certainty. But there are the naysayers and those that talk about the downsides of deregulation. What are your opinions on that?

JN: The downside of it is that the utilities lose some of their monopoly. So most of the doubts that have been cast about deregulation and its effectiveness have been by those people representing the utilities, who have a vested interest in leaving regulation in place.

The stakeholders are the legislators, politicians, and utility companies in those regulated states, and they want more of the status quo.

In other states, the stakeholders are the end users and they have a voice.

There’s really no downside. We haven’t seen a market that’s re-regulated. At one point, California re-regulated and now they’ve deregulated again. But otherwise, no market has and in fact several states are actually pushing for deregulation.

The Carolinas, Florida, Arizona, Virginia are the most recent ones moving toward deregulation because they know that the benefits to the end user work. And they need to make their state competitive if they want to attract businesses and employment accordingly. They have to be able to make it a better business environment, and what better way to create that environment than giving them the opportunity to lower their energy costs?

The only other downside is in the residential market. There’s been some less-than-scrupulous players that have gone after less-informed consumers and taken advantage of them by putting them in higher rates than they otherwise would be paying.

It’s a bad practice. The states’ attorneys have aggressively gone after those companies, and we as an industry have self-policed aggressively. So to say that no one has ever been harmed by this would not be true.

Aside from that, deregulation is mostly a positive. In Illinois, for instance, almost 98 percent of all the businesses that have a choice are actually taking advantage of it. That means they like it.

Closing Thoughts

MZ: Absolutely. And we’ve seen the overwhelming savings and positivity from our clients in our market, but in the other states that also have deregulation you can see the big impact it has on their bottom line.

Any other general thoughts on deregulation? Anything else you’d like to touch on?

JN: Well, deregulation has brought choice to end users. And that choice comes with options. How long are you going to fix a rate? Do you want to use a different product than the utility company is offering as the default?

But the most recent benefit is that end users can choose to go green now whereas they didn’t have that option before. So whether you’re a business or a resident, you can buy your power from a sustainable source, and that’s kind of cool. It doesn’t exist in natural gas per se — we haven’t figured out how to “green up,” if you will, natural gas — but we’ve certainly done that in electricity.

MZ: Well John, thank you very much for your time today. It was a great conversation on deregulation. And thank you all for watching! If you’d like to learn more about options in your state, please feel free to reach out to us or visit our website.

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Run an Effective Energy RFP – Energy ABC’s #3

Video Transcript

Figuring out when to buy energy and what to include in your energy RFP can mean the difference between an operating budget bust or surplus for your District.

Get your notes ready! Because I’m about to rapid-fire some best practices for running an effective energy RFP for your district.

Give yourself plenty of time.

Let’s say you get yet another call from an energy provider asking you about your gas and electric contracts. You spout off your standard answer of “We’re locked in for another three years, so we’re all good” and hang up the phone.

While you’re not interested in taking a sales call, it does jog your memory that you haven’t looked at your actual contracts in quite a while. So you track them down and see that you’re up in the next 12 months. So now what?

I’ll give you a hint: the answer is not file it away in a cabinet until a month before your contract expires.

Give yourself ample time to review this process. Engage with new providers. Watch the market. And get buy-in from any necessary parties, such as your Board.

By giving yourself plenty of runway, you could save thousands of dollars and add to your bottom line.

Know your contract end date.

Because all energy supply contracts are purchased on the futures market, they’re all technically forward-facing agreements. So, you can go to market at any time during your current agreement for your renewal.

Let’s say, for example, you have a December end date on your current agreement. You can go out to RFP in January, if you’d like. And you would set a parameter for a December start date. Suppliers can start the new contract whenever you’d like.

How this would work is your new contract would bookend to your current agreement. Just make sure you have accuracy in what your current contract end date is. What you don’t want to happen is to have an overlap of two supply agreements or have a gap in service — both which can result in large penalties to your District.

Watch the market.

So is there a better time of year to buy than others?

Not really.

In theory, it makes sense that you would buy in the off-peak seasons — so you would buy gas when it’s warm outside and buy electricity when it’s cool outside.

But anymore, the market’s not really weather-driven because we’re at a surplus of natural gas domestically. You want to pay more attention to geopolitical speculations and financial gains of any traders, and that’s really what’s going to affect the market.

If you’re trying to “time the market,” you’re better off to give yourself enough runway to watch the market for opportunities. And if you don’t have the time to do that, align yourself with a partner who will and will notify you of any substantial changes.

Consider competitive bidding.

Which brings me to my final point. Call your peers and ask for referrals of any energy partners they utilize. Then pick their brains on RFP parameters that they have.

Keep in mind any changes you have upcoming, such as a closing building or solar installation. These partners should be able to help you build out an effective energy RFP to run on your own, or maybe you trust them enough to run it for you.

Also, keep in mind that energy procurement in public schools does not require a formal bidding process per school code. So, you’re able to work and align with partners that you trust and value.

However, competitive bidding is always a great option, whether you do a traditional sealed bid or maybe you utilized a more tech-advanced option, such as a reverse auction software. Competitive bidding where multiple suppliers compete against each other can really drive down your overall cost.

Build your own effective energy RFP.

Now that you have a jumping-off point, pull out those dusty old contracts and see when they end. If it’s in the next 12-18 months, now is the perfect time to start gathering information and engage with new partners.

Thanks for watching! Check us out in our next video in the series Energy ABC’s.

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3 Ways to Purchase Energy – Energy ABC’s #2

Video Transcript

Hey guys! It’s Becky with Nania Energy, back with the second video in our series “Energy ABC’s.”

Today we’re going to cover a heavy topic of the different ways to purchase energy.

There’s a lot of different options available to you: there’s consortiums, using a broker or consultant, or going direct through a supplier. We’ll cover the pros and cons of each so that you can figure out which is best for your district.

Option 1: Consortiums

Alright, so let’s start with consortiums — or, buying groups or co-ops.

These are typically large groups of similarly-structured businesses, like a K-12 school, that band together to purchase energy in bulk.

A lot of these were created over a decade ago when electricity was first deregulated in Illinois and there was a lot of volatility in the market. So they banded together for safety in numbers.

Consortium — Pros

Think of it like a glacier — it’s large and slow moving, but doesn’t veer much off course. That’s the way that consortiums typically purchase energy, which is great for you as a school district because it’s little to no maintenance.

Consortiums are typically governed by an appointed board, and they oversee a third party — such as a consultant or a supplier — that makes a purchasing decision on your behalf. So it’s kind of a set it and forget it option for your school district. This is really great for you if you’re a smaller school and energy isn’t a large portion of your budget, and you just don’t have the time to dedicate to it.

Consortium — Cons

Some of the disadvantages that come with this, however, is that they’re not a low-cost provider. They don’t set out to be. They’re trying to flat-line the price and eliminate any of the big highs and lows that may exist.

So any opportunities that pop up like we saw in summer 2019 — when we had the lowest prices in the last decade — you’re not able to take advantage of, and you’re limited in the flexibility that you have to look outside of the buying group itself.

A lot of times, to even exit the group once you’re a member could take 3 or 4 years. So you have to be pretty committed to the process if you’re going to join.

 Option 2: Advisor, Broker, or Consultant

The second option you have to purchase energy is to use an ABC — an Advisor, Broker, or Consultant.

While there’s differences between those three, one similarity is that they’re all a third-party that acts as a middleman between your district and your supplier.

ABC — Pros

They often have several supplier relationships, so when they run an RFP for you they’re able to bring a large level of competition — which translates into a lower rate for your school.

They also can offer a range of services to help make your life easier and save you time and energy. This includes:

  • Bill auditing services
  • Handling customer service issues you have with the utility
  • Helping you forecast your forward fiscal budget
  • Validating any ROIs you have on efficiency projects.

ABC — Cons

Some disadvantages to using an ABC, however, is that there is an additional cost. You do pay them a fee, and you should know what that fee is to know that it’s fair and reasonable for your district.

Each ABC handles this a little bit differently. Some require an up-front consulting fee, some bill you directly monthly, and others will actually bake their fee into your fixed rate on your supplier bill.

Make sure you have the conversation ahead of time and know what this is. If your current ABC isn’t willing to share this information with you, it’s generally a red flag that something’s probably not right.

Another drawback of using an ABC is that there are unfortunately low barriers to entry in our state. There’s literally hundreds of brokers in the state of Illinois.

Make sure that you do your due diligence and ask them for references of other K-12’s they’re working with. Check up on them and make sure that they have a full understanding of how your school business operates. It’ll be most important to your bottom line.

Option 3: Directly through a supplier

A third option you have is to work directly through a supplier. These are the people you receive your invoice from each month.

Direct through Supplier — Pros

By working directly through a supplier, there’s no third-party administration cost like there is with using a consortium or a broker.

They also may be able to offer you some completely customized products that you’re not able to get by running a standardized RFP.

Direct through Supplier — Cons

However, this option is really best for districts that have the time and energy that it takes to understand the energy world and make sure they’re not putting their school at risk.

 

There’s a lot of moving pieces to energy, and having a partner to help guide you through that process is imperative to ensure you’re making the best decision for you and your school business.

I hope you enjoyed this video and found it helpful in determining which method you’ll use going forward. If you have any questions, drop us a line or shoot us a note — we’d be happy to help.

Otherwise, we’ll see you next time on Energy ABC’s!

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How to Switch Energy Suppliers

By AJ Brockman

If you want to switch energy suppliers, there’s one section of your current energy agreement that you need to look at first: the “term” or “delivery period.”

The “term” or “delivery period” section contains auto-renewal language, which is a standard part of any energy contract.

Usually, this clause states that the contract will automatically renew for a certain amount of time (ex. 12 months) on a variable or holdover rate unless you submit a notice to terminate in specified terms (ex. 60 days) before your contract expires.

For a smooth supplier switch — and to comply with the terms of your agreement — there are two documents you need to submit to your current supplier: a non-renewal notice and a termination letter.

What is a non-renewal notice?

A non-renewal notice (sometimes called a “Notice to Shop”) tells your current supplier that you intend to shop for rates and you don’t want your contract to automatically renew.

This notice can be retracted and does not automatically terminate your service if you decide to renew with your current supplier.

  • See a sample non-renewal letter here.

When should you submit a non-renewal notice?

You should submit the notice as soon as you decide to shop for rates — which should be at least 6-9 months before your contract expires. This ensures that your accounts don’t automatically rollover while you’re shopping, and you’re following your contractual obligation to give formal notice.

What is a termination letter?

A termination letter notifies your current supplier that you will be using a different energy supplier when your contract expires. It clearly outlines which account numbers and service addresses you wish to terminate.

The letter also states that you are not responsible for any energy delivered to your accounts after your termination date.

  • See a sample termination letter here.

When should you submit a termination letter?

You should submit a termination letter after you sign an agreement.

Note: it is imperative that you submit the termination letter before the deadline that’s stated in your contract. This may require you to submit it before you sign a new agreement.

This deadline varies by supplier — some want the notice 60 days before your contract expires, others require 90 days or even 6 months’ notice.

If you submit the termination letter after this deadline, you could encounter issues or even termination/liquidation fees if the contract has already renewed.

What is the process for drafting a non-renewal or termination letter?

If you’re working with an advisor, we’ll draft up the letter for you that includes all the necessary information (account numbers, service addresses, supplier address, etc.).

When we send it to you, you should copy it onto your company’s letterhead and sign it.

To submit the letter, you can either send it to the supplier yourself or send it to us — we’ll send it to the supplier on your behalf. If you choose to send it yourself, we recommend faxing or emailing a copy to the supplier in addition to mailing it.

Ask your broker or advisor how to switch energy suppliers.

These documents are necessary for switching suppliers and submitting them on time will make the switching process seamless. Ask your broker or advisor for templates and guidance.

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TMT: A Lighting Project + Your Energy Rate

Video Transcript

Hi! One question I get asked quite a bit is, “What impact would a lighting project have on my facility’s energy rate?”

If you’re looking to reduce your electricity usage, a lighting project will help you do that. But another surprise benefit is the impact it’ll have on your electric rate.

In this week’s Two-Minute Tuesday, we’ll show you exactly how.

What pricing factor does a lighting project impact?

One factor that suppliers take into consideration when giving an electric supply rate is your PLC number, or Peak Load Contribution.

This is the capacity and transmission — “demand” — charges that are attached to your facility.

Your PLC is measured over the 5 heaviest days of grid usage in the year. Think of a summer afternoon when everyone’s using a lot of air conditioning.

PJM will measure your usage on those 5 heaviest days and assign a PLC number (PLC tag) to you. The utility — in this case ComEd here in northern Illinois — will post that number to your account in December and it will go into effect the following June.

Lighting Project and PLCs

So here’s how a lighting project affects PLCs.

Think about an LED bulb that you’re putting in, replacing an old incandescent or metal halide or whatever bulb you currently have in your fixtures. The LED will put out much less wattage and use fewer kilowatt-hours over the course of those 5 days that the grid is measuring over the hot summer months.

The immediate impact you’re going to see is on the next month’s bill following the project’s completion. Your usage (kilowatt-hours) will be lower because those LEDs are using less energy compared to older bulbs.

You’ll experience a later impact to your PLCs in June the year after you complete the lighting project. So while you see an immediate change in your usage on next month’s bill, your change in PLC number will impact next year’s bill.

What does this look like?

Here’s a quick customer example.

Working with one of our local manufacturing clients, we started looking at new rates for their electricity contract that’s expiring this year. The did a lighting project for efficiency last spring.

While they got the full benefit in the summer from lower usage (the lighting project reduced their usage by about 1 million kWh), where we really saw the benefit was in the PLC number.

In November, we started looking at pricing for them. And the original pricing came in significantly higher than their current rate. Lighting Project and Energy Rate

Waiting until December when ComEd came out with new PLC numbers starting in June 2020, that PLC number was cut in half — they were in the 500 range and got cut to about 250. This resulted in around 14% savings over their current contracted rate.

A lighting project can impact your energy rate.

As you can see, a lighting project can impact more than your usage. If you’re considering a lighting project for your facility, feel free to reach out to us for guidance.

Thank you for watching! If you found this video helpful, please like, comment, or share below.

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Ask An Advisor: Building an Energy Strategy

Video Transcript

Hi! I’m Calvin. I’m a Certified Energy Manager and a Senior Advisor here at Nania Energy. When it comes to energy, it’s important to have a strategic plan to help you achieve your goals.

So in today’s video, we’re going to talk about 3 key factors in building such a plan: Define, Design, and Decide.

Step 1: Define Your Energy Goals

The first step in a successful energy strategy is to define your energy goals. 

While everyone would like to get a lower rate, that really is a step toward achieving your goals — it isn’t a goal itself.

Depending on the size of your company and the industry, there are any number of goals that you could have, but here are some common ones:

It’s also important to understand the why behind those goals. If you’re looking to reduce your carbon footprint, is it because you want to be more green for promotional purposes? Or because you’ve got corporate initiatives around sustainability?

Having clearly defined energy goals and knowing why you want to accomplish them will help you to design your strategy — which is Step 2.

Step 2: Design Multiple Paths

The second step in strategy development is to design multiple paths to achieving your goals.

For every goal, there are a variety of ways in which we can accomplish them.

Let’s take the goal of “Reducing operating costs by 10%”. Your operating costs are made up of your rate multiplied by your usage. So there’s a number of things we can do:

  1. Try to get a lower rate
  2. Improve efficiency, which will reduce usage
  3. Shift usage to off-peak times when rates are lower and reduce demand charges
  4. Look for ways to eliminate usage altogether

From here, we look at what goes into each of these tactics and move on to Step 3: Decide.

Step 3: Decide Which Tactics to Use

In Step 3, we decide which tactics to use to achieve your goal.

Choose the 1-2 options that are most realistic for your organization and determine in detail the time it would take to implement them.

Repeat these steps for each goal because in reality, you’re going to have more than one.

Once you’ve place all of these in a single timeline, you’ll have a clear starting point for your energy strategy.

Be at the top of your energy game.

If Tiger Woods has a swing coach and Oprah has a life coach, then you too can have a coach to help you design and implement your energy strategy and keep you at the top of your energy game.

Thanks for watching! And if you have any questions about your energy strategy — or just where to start — please contact us.

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