Managing Volumetric Uncertainty

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Project Description

Challenge

  • The client was forecasting a 30% reduction in consumption due to the installation of new equipment
  • Given the uncertainty around actual future usage, suppliers were not willing offer liberal monthly bandwidth provisions
  • The supplier proposals varied widely and each posed a different level of financial risk to the client

Energy Edge’s Value Add

  • Energy Edge’s technical knowledge of settlement calculations enabled the team to properly analyze the differences between each proposal
  • Energy Edge quantified the risk associated with each supplier’s offer
  • Additionally, Energy Edge worked with the client to better model the forecasted usage and reduce the volumetric uncertainty for the suppliers
  • Energy Edge also negotiated alternative contract language reducing the client’s financial risk

Client Outcome

  • The client was able to secure a contract that insulated them from most of the volumetric risk while still obtaining a competitive price
  • Upon reflection of actual versus forecasted usage the client would have realized a $2.50 per MWh liquidation charge without Energy Edge’s involvement
  • Annual savings approximate to $70,000