Energy represents a significant cost savings opportunity if managed strategically. (To view other posts in this series, click here.)
To help you make smarter buying decisions we’ve worked with our energy management partner Trane Building Advantage, on a 6-part blog series exploring different core energy market locations in the United States. Use these posts to learn about the numerous elements that affect rates, focus on long-term total cost of ownership and reduce your cost.
We are starting the series in CU’s home state of Ohio, read on to understand how Ohio’s energy profile foundations affect the cost of energy.
MAJOR DEREGULATED UTILITIES: ELECTRIC & NATURAL GAS
Buildings that fall within these electric and natural gas utility market areas can competitively shop for supply and establish a product and price that best fits their business needs. However, if a purchasing decision is not specified, the facility will automatically be supplied through the electric or natural gas utility default service offer. If this spend decision is unmanaged then you run the risk of automatically being placed into the default offering. Historically this default offering is 10 – 20% higher than a competitive rate and more variable.
You can analyze your facility’s utility vendor and pricing to make sure you were not previously thrown into a non-competitive default rate. Further, if you are opening a new location or moving locations it is the perfect time to examine your electric and natural gas utility offering options and needs to avoid paying a higher rate.
WHOLESALE ELECTRIC MARKET: PJM REGIONAL TRANSMISSION SYSTEM
The state of Ohio, along with a few other locations, sits within the PJM (Pennsylvania, Jersey, Maryland) regional transmission system. The PJM system, the largest of its kind in the United States, is responsible for reliability of the electric grid for all utilities in these market areas. Specifically, PJM’s responsibility is to ensure that there is enough generation to meet the system demand by coordinating the movement of wholesale electricity.
There is a cost for PJM transmission services and this fee is many times hidden in an electricity price. To effectively manage pricing for your facility it is essential to understand how PJM costs are assessed and how your facility can reduce these costs going forward. Taking a deeper dive into your current bill to understand how PJM fees appear is a good first step.
SUPPLIERS REGISTERED WITH THE PUBLIC UTILITY COMMISSION OF OHIO
In Ohio, finding the most strategically aligned supplier for your business can take some work. Ohio’s large supplier base in electricity (141 suppliers) and natural gas (78 suppliers) creates multiple options for energy buyers.
However, increased options also means additional time spent evaluating suppliers and their offerings to identify which will be the best fit for their specific energy needs. (Spoiler alert: we’ll talk about solutions for identifying suppliers a bit later)
ELECTRICITY GENERATION STATISTICS
Costs have stabilized with the addition of more natural gas generation and reduced natural gas prices over the past 24 months. Additional financial relief has come from transmission system upgrades, which has allowed the state to receive imports from across the PJM interconnection.
With so many variables directly affecting the price of energy this can be a complex category to manage spend. By focusing on smarter energy purchasing you can minimize risk and the potential for price creep, while achieving savings.
That’s why Corporate United members work with Trane Building Advantage to analyze their energy usage in all markets and make the best buying decisions based on localized need.
Want to learn more? Watch an on-demand webinar from our partners, the experts at Trane Building Advantage to take a deeper dive into understanding your electricity and natural gas pricing.
More Articles in This Series
TEXAS: Discover what influences energy pricing in the Lone State state to appropriately manage your energy spend.
NEW YORK: Find out how New York’s evolving energy profile affects your cost of energy.
ILLINOIS: Take an indepth look at localized spend indicators in the home state to the Windy City.
MARYLAND: Affect the cost of energy in your Maryland operations based on local energy predictors.
PENNSYLVANIA: Optimize Energy Spend in Pennsylvania and Eliminate Energy Guesswork