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Best Practices in Government Energy Bidding

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If you are a government entity, you want to feel confident about energy bidding and efficiently move through the process.

Direct Energy Business has a team of experts who fully understand the bidding process and who work with local and federal government entities on a regular basis to fulfill requests for proposals.

The following guidelines and suggestions are intended to help you solicit offers that are in line with the goals of your organization and ensure that you get the value you want from the energy supplier you select

Published in: Government & Nonprofit
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Best Practices in Government Energy Bidding

  1. 1. BEST PRACTICES IN ENERGY BIDDING
  2. 2. If you are a government entity, you want to feel confident about energy bidding and be able to move through the process efficiently. Direct Energy Business has a team of experts who fully understand the bidding process and that work with local and federal government entities on a regular basis to fulfill requests for proposals. The following guidelines and suggestions are intended to help you solicit offers that are in- line with the goals of your organization and ensure that you get the value you want from the energy supplier you select. INTRODUCTION
  3. 3. KNOW THY MARKET Before you begin soliciting bids from suppliers, you may want to brush up on market conditions and the factors impacting pricing in your specific region, as well as any regulatory issues that may affect near- or long-term pricing. If you haven’t been following the markets already, reach out to the suppliers you’re considering and request a market conditions update. BEFORE YOU SOLICIT BIDS NEED HELP KEEPING UP WITH THE MARKET? You may already be overloaded with information. And, adding fast-changing energy market information to your inbox may take away from other daily tasks. Direct Energy Business Advisory Services can navigate through the reams of electric and natural gas market intelligence and direct you to the most relevant and impactful information–so you can shut off all the noise and focus on key tasks.
  4. 4. Research suppliers’ credibility and reliability and check references. Evaluate the size and dedication of the Sales, Operations and Customer Service teams that will be supporting you. Inquire about operational processes, such as what your options are for making payments, being invoiced and accessing your account information online. BEFORE YOU SOLICIT BIDS GET TO KNOW ANY SUPPLIERS YOU ARE CONSIDERING Before you begin soliciting bids from suppliers–or even while the process is occurring and you’re waiting for responses–you may want to look into some details about what each supplier can offer your organization and strategy. The following due diligence can be built into your request for proposal (RFP) so that suppliers answer them as part of their response: Can I get help from this supplier when I need it? Is this supplier easy to work with? Is the supplier financially stable? ?
  5. 5. PUTTING YOUR BID TOGETHER 1 Present your energy concerns and business objectives, as well as budget goals, so that suppliers can provide you with the most suitable pricing options and terms. Be sure that you provide accurate and complete information on all your active accounts/meters to be priced. Include a signed Letter of Authorization (LOA) with the bid so that vendors can obtain usage from the utility and start pricing as soon as possible. PROVIDE COMPREHENSIVE & COMPLETE ACCOUNT INFORMATION DEFINE YOUR GOALS 2 Your RFP is the blueprint for generating accurate, competitive responses from suppliers that meet your objectives. So, what you include in your RFP is extremely important. The following are some things to consider:
  6. 6. Renewable Energy MORE ON DEFINING YOUR GOALS HAVE YOU HEARD ABOUT THE CLIMATE GOALS FOR FEDERAL BUILDINGS FROM THE DEPARTMENT OF ENERGY? Commercial buildings and industrial plants account for about half of the nation's energy use and more than 40% of the nation's carbon emissions. That’s why the Department of Energy's Better Buildings Initiative focuses on reducing energy use in buildings, plants and homes by 20% within 10 years. With a focus on federal leadership in this area, the initiative also calls on federal facilities to reduce greenhouse gas emissions by 40%, increase renewables by 30% and increase energy efficiency by 25%. Source: www.energy.gov/articles/infographic-better-buildings-leading-big-energy-savings BUT HOW CAN YOUR FACILITIES ACHIEVE THIS? An energy audit and efficiency upgrades Energy monitoring to determine inefficiencies or equipment failures and opportunities for savings
  7. 7. You want the winning supplier to begin serving your accounts on the requested start date/month. In order to ensure a smooth transition from your current supplier or the utility, you’ll want to release your bid 3-4 months before enrollment deadlines (which are specific to your local utility) to ensure that there is enough time to enroll your accounts once you select a supplier. RELEASING YOUR BID TIMING YOUR BID IT’S ALL ABOUT YOUR TIMING Avoid setting bid due dates for Mondays or Thursdays because upward market movement is more likely on these days. BID DUE DATE(S)
  8. 8. Although individual cost components vary by market/region, the following chart outlines some of the common costs associated with electricity supply and which ones you may have some control over, depending on the type of product offers you receive and how much/when you use energy. COST COMPONENTS – WHAT YOU CAN AND CAN’T CONTROL REQUEST FOR PRICING OPTIONS An experienced supplier will provide details around product structures that may better suit your organization’s needs and identify how you can better manage the components that may be within your control. NEED HELP WITH PRODUCT STRUCTURES? Cost Component Component Control (Y/N) Energy Yes Losses No Capacity Yes Reliability Must Run No Transmission Yes Ancillaries No Renewable Portfolio Standard No Supplier Fee Yes Taxes No ?
  9. 9. Ask for multiple terms (ex: 12, 24, 36 months). Ask for a complete itemized cost buildup so that you may easily compare pricing between all suppliers you are soliciting bids from and ensure that you are comparing your offers apples to apples. In the case of reverse auctions, provide the exact costs (swing, tax, etc.) to be included in the price. TERMS & COST INCLUSIONS REQUEST FOR PRICING OPTIONS
  10. 10. The energy markets continue to move, even after suppliers provide you their pricing bids. So, once you receive your bids: YOU’VE GOT YOUR RESPONSES... NOW WHAT? RECEIVING YOUR BIDS Be prompt in responding to bids to ensure that you are able to lock in the price you choose. Avoid holding a price, especially over the weekend, as suppliers may be required to add risk premiums to cover any potential market movement.
  11. 11. Imperative to managing your energy procurement is understanding it’s not only the price you pay for the commodity. How you use energy, when you use it and how much you use (i.e. your demand) can have a significant impact on your energy budget and what your total costs will be. YOUR ENERGY DEMAND COULD BE WEIGHING YOU DOWN THINKING OUTSIDE OF THE SUPPLY PRICE IT’S NOT JUST ABOUT PRICE
  12. 12. Wireless Electricity Monitoring Energy Efficiency Peak Load Management Load Shape Management Demand Response THINKING OUTSIDE OF THE SUPPLY PRICE READY TO CUT COSTS WITH A COMPLETE SUPPLY & DEMAND PLAN? An experienced supplier can work with you to integrate your supply strategy with a demand management plan that helps you use less and spend less on energy. You may even be able to integrate any costs associated with demand-side programs into your energy supply agreement and avoid incurring up-front costs for projects. Consider the following options for your energy strategy and talk to a supplier with experience developing, administering and executing these programs: If you’re buying your energy supply through one provider and energy efficiency products and services through another, you’re probably not getting a coordinated view of your energy spend. !
  13. 13. STILL HAVE QUESTIONS? WE’RE HERE TO HELP SELECTING YOUR SUPPLIER VIA BID PROCESS If you want to learn more about energy bidding or are interested in speaking to an energy professional with experience in the bid process before you get started, please contact: Kevin George 732.516.3247 Kevin.George@directenergy.com
  14. 14. © 2016 Direct Energy. All Rights Reserved. Direct Energy and the Lightning Bolt design are registered trademarks of Direct Energy. (DC PSC License No. EA-04-4-4; EA-13-12; GA-13-03-1; NJ BPU License Nos. ESL-0165, ESL-142, GSL-0145, GSL-0128; MD PSC License Nos. IR-437; IR-2697; IR-3123; IR-3108; PUCT Cert. No. 10011; Direct Energy Business, LLC CT PURA License Nos. 12-03; 00-05-14RE01; MA DPU License Nos. CS-021; GS-052; CS-108; GS-051). Products and services vary depending on region or market. DEB-0311-2016

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