Energy portfolio management is often neglected by many organizations even though it has a considerable potential to reduce costs. Companies yearning for a competitive edge by keeping their bottom line in check need to consider informed decision-making and cautious spending on their energy contracts. Not only is it important to budget your energy cost every year, it is also important to engage in long-term contracts when the time is right.
GEP has managed over $5 billion in energy spend for its diverse client base across electricity, natural gas and other energy categories. Leveraging our market intelligence capabilities and energy procurement knowledge, we help several market-leading companies strategically manage their energy portfolio.
Our energy category experts monitor and evaluate energy markets very closely. From capturing daily price trends to staying on top of market regulation and rate case announcements, we keep track of every movement in the energy market that may affect procurement decisions regionally, nationally and, in some cases, globally. Our market reports contribute significantly to the decision-making process and empower procurement leaders to design fact-based strategies.
Budgeting and Planning
A focused approach toward budgeting and planning lays the foundation for evaluating opportunities and identifying the company's acceptable risk exposure. As energy markets are highly volatile by nature, budgeting is considered to be a critical step toward risk mitigation. We help our clients with their annual budget development by analyzing market trends and impending price fluctuation.
Portfolio and Risk Management
Commodity prices are variable and energy prices, in particular, are highly volatile. When to hedge, what percentage usage to hedge and for how long to hedge — these are some of the challenging questions that procurement managers face. We work with our clients to identify opportune times to hedge future contracts to secure better prices for their current and future requirements. Investing wisely in long-term contracts eliminates uncertainties and maximizes profits.
Leveraging our domain knowledge, we work with our clients to ensure that the procurement strategy is aligned with the corporate strategy and positioned to deliver the maximum value. We evaluate our clients' energy consumption profile and develop the right approach for them, considering factors like time of entry, supplier product offerings and contract terms that suit their needs. The whole process is aimed at providing maximum savings, while minimizing risk.
One area that is often neglected during energy sourcing is the contract structure itself. It is very critical for the contract to include the right terms and conditions that would secure a company's position under any unforeseen circumstances. These may include liability and material change clauses which come into effect when there is over or under usage of committed volumes. If ignored, these penalties could increase energy costs significantly. During the execution of a contract, GEP works very closely with procurement managers and their legal counsels to ensure the contract protects our client from any such adverse circumstances.
Demand Response Management
Our demand management initiatives are based on the overall strategy and objectives of our clients. These programs are mainly aimed at reducing energy consumption and managing energy usage effectively. GEP offers services such as usage study and benchmarking, pre-audits and planning, identification and evaluation of demand response programs, and implementation and tracking of such initiatives.