Enhancing Energy Procurement Strategies for Businesses

Fremont, CA: Energy procurement is the approach taken to secure energy supplies from a local distribution company (LDC) or an external provider. This method presents various benefits, such as minimizing unforeseen costs, revealing hidden charges, and preventing extra expenses. It boosts the precision of load forecasting, guarantees a reliable fuel source, and improves the management of fuel expenses and alternatives.

The relationship between energy pricing and risk is critical for businesses and facilities, as they must secure natural gas or electricity to operate effectively. Energy procurement refers to obtaining energy supplies from third-party energy suppliers or local distribution companies (LDCs).

Despite its seemingly straightforward nature, energy procurement involves complexities, particularly concerning current global circumstances. The COVID-19 pandemic has significantly influenced electricity prices, which are still undergoing recovery. Additionally, the growing emphasis on renewable energy is shifting away from fossil fuels, indicating that future energy procurement strategies will predominantly center on renewable sources such as wind, solar, and hydrogen.

Regarding energy procurement, your company should seek an energy supplier offering competitive pricing and a solution tailored to your needs. Working with the correct supplier guarantees increased efficiency because different industries have different needs when it comes to energy use. Many individuals are unaware that, although it varies by state, they have options for where to purchase electricity and natural gas.  Finding the correct supplier can be a very effective strategy to reduce your utility costs.

Instead of relying solely on rates monopolized by utility companies, many U.S. states are expanding their energy markets and permitting companies to purchase energy from private sources. Choosing an energy provider in these deregulated states is similar to selecting any other service provider. You should anticipate interacting with the following parties while shopping:

Supplier

Suppliers are private, wholesale, and retail energy companies that supply customers with energy. They buy energy straight from the market and provide an alternative to utility company prices. You can count on them to provide customized energy solutions at cheap prices.

Broker/Consultant

Buyers and sellers are connected via energy brokers or consultants. To implement a successful procurement plan, they primarily collaborate with your company's energy procurement manager to comprehend your objectives. With your best interests in mind, the broker or consultant will subsequently collaborate with suppliers to carry out those activities. Working with a broker or consultant is unnecessary; you are free to deal directly with a supplier if you desire.

Utility Company

Your supplier will be the utility or LDC by default. Therefore, if you decide to do nothing, the local utility will take care of both distribution and supply. While some attempt to incentivize end users in one way or another, most utilities do not have a preference for supply between suppliers or with them. Utilities will charge a market-based cost that fluctuates monthly or a fixed rate for a specific duration, often three or six months, for supplies.