Centralizing Your Energy Supply Spend

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1 HAPPY NEW YEAR! The entire team at Siemens Retail & Commercial Systems wishes you all the best for a prosperous If saving more money is on your list of resolutions, then contact us. We d love to talk with you about all of the cost-saving opportunities that a Siemens partnership and the Site Controls Energy Management System can provide. Centralizing Your Energy Supply Spend THE NATURAL GAS MARKET IS CHANGING. North America is rapidly transforming into a global energy powerhouse, driven by technological improvements in oil and gas production. This has led to the rise of new, lower cost supply basins and is creating solutions for higher priced markets to improve their competitive position. Existing infrastructure for transporting natural gas is swiftly adapting to this change through expansion, flow reversal, and the addition of thousands of miles of new pipe to bring this new production to market. These changes are significantly impacting both natural gas and electricity prices as gas-fired generation gains more and more market share. Often, organizations pay more than they should for energy due to limited leverage, long-term $/kwh fixed price agreements, and insufficient market expertise. The risks posed by regulatory uncertainty and the numerous factors that affect the total price paid for energy and secure supply make sound energy management even more difficult. This amplifies the need to maintain a forward market view founded on experience, deep market knowledge, and robust analytics. Some retailers are beginning to adopt a more sophisticated approach to their energy purchasing strategy to: Lower energy procurement costs Implement strategies to manage forward energy costs to protect against future price hikes Capture price weakness Improve a negotiation position and outcome with energy suppliers Ensure price certainty and risk-free operations Take advantage of co-incident peak reduction opportunities such as capacity charge management ALSO IN THIS ISSUE >> Selecting an Energy Supply Expert page 3 Intelligent Platform page 5 Reducing Total Energy Costs page 5

2 If your retail chain or enterprise has already implemented a centralized Energy Management System (EMS), then you should already be realizing the significant savings that come from extended visibility and prioritized views of all of your locations. Now perhaps it s time to take a look at your energy supply spend, from supply strategy to hedging and sourcing. Managing an organization s energy investment, particularly with hundreds of locations across a country, and finding the most efficient and effective options for smart energy purchase, use, and management requires a lot of time and expertise. Dealing with a patchwork of rate plans, tariff structures, competitive suppliers, etc. can be overwhelming for understaffed energy departments. Similar to the benefits an EMS brings to energy demand, a centralized energy supply model with above-site visibility can save the organization time and money. For example, if you are following a decentralized, single-site supply procurement model, there is an opportunity for greater savings through aggregated purchasing. Aggregation saves money by leveraging the purchasing power of increased volumes: 1 SITE 10 SITES 100 SITES * 50,000 kwh/year/site = 50,000 kwh/year * $0.06/kWh = $3,000/year/site * 50,000 kwh/year/site = 500,000 kwh/year * $0.058/kWh = $2,900/year/site * 50,000 kwh/year/site = 5,000,000 kwh/year * $0.055/kWh = $2,750/year/site Selecting an Energy Supply Expert An energy supply expert understands the unique challenges of retailers and offers the strategy, direction, and recommendations needed to convert energy from an unpredictable liability into a strategic asset. Working with an energy supply expert creates several advantages for your organization: An independent agent acting on behalf of the client to identify optimal energy sourcing options and buying opportunities Enables access to the lowest energy prices in the market by leveraging solid and long-standing supplier relationships Significant discounts achieved based on large portfolio purchasing power Track record of reducing premiums and hidden cost components by removing penalty language and other unnecessary seller protections Ability to serve large energy intensive customers as well as retail and commercial customers When reviewing potential partners, be sure to look for a company that has extensive relationships with energy suppliers and a proven track record of protecting the interests of their customers. They should be able to deliver solid supply contracts that meet your needs and provide the cost transparency and structure that meet your objectives. Do their relationships with suppliers go back many years? If so, this gives your potential procurement partner the added context and insight into mergers and acquisitions that have taken place in the energy sector. These long-term relationships are important because they lead to communications specific to your markets, accounts, and needs. An energy supply expert should also know the local distribution utilities and have a deep understanding of the tariffs under which your facilities operate. If there is an opportunity to move to a more appropriate tariff, such as one that is better aligned to your individual site or group of sites, the energy supply expert should know and present the details of those opportunities to you. Other factors to consider when selecting an energy supply expert include: Can an energy supply expert provide services on a local or global level, single location or enterprise-wide? Are you able to test-market their services at selected sites and then roll out nationwide when proven successful? Will the energy supply expert be able to report their customers ROI track record and provide customer satisfaction ratings? 2

3 There are also additional benefits your company can realize when partnering with an energy supply expert. Supply Services The procurement process can include pricing structures aligned to your cost management goals and objectives, with the end result being a strategy that works for your organization and that allows you to obtain the most attractive offers that are in alignment with your energy cost management goals and objectives. An energy procurement expert should consider contract quality, billing accuracy, supplier responsiveness and service quality, offered unit costs, and other factors in their recommendations to you. For example, a company like Siemens has the capability to perform a bid solicitation process via Reverse Auction, Sealed Bid, and iterative RFx processes. The following support should also be offered: Risk management and development of a Risk Policy Procurement strategy that supports the Risk Policy or your organization s procurement policies Procurement event supported with analysis and recommendation Supply options that support any sustainability initiatives Contract negotiations Budgeting/forecasting Utility Bill Management With complex energy usage patterns, remote locations, and facility needs, streamlining and automating business processes are crucial for keeping costs in check and staying competitive. What department in your organization pays the utility bills? Accounting or utility bill experts? Is there transparency in your company s overall utility spend? Who tracks trends that can be used to proactively manage costs? Who is responsible for the oversight of your energy supply costs? Are you paying late fees and penalties due to short turnaround times? Are you proactively negotiating deposit requirements and refunds? Are your accounts on the most optimal rate or could you save money by changing? Did the utility over or undercharge you for your utility expenses? Look for a utility bill management service that will put you in control of your utility costs. A vendor partner should offer the combination of technology, applied expertise, a proprietary audit process, and a commitment to maximizing customer value through a dedicated in-house staff. Look for services that include: Utility Bill Validation Tariff and Tax Optimization Energy Budget Development Bill Payment Services Web-based Reporting & Metrics Here are a few examples of what Siemens Procurement Services has been able to achieve through Utility Bill Management. Virginia Billing Rate Error During invoice validation it was noticed that an account s utility vendor charged an old rate, which was higher than the newly effective price. Siemens contacted the vendor with this information and the vendor agreed to generate a new invoice. Savings: $2,041 Texas Invoice Validation Invoice validation discovered that a large account s usage was much higher than anticipated. Research indicated that the facility recently received an upgraded utility meter. The vendor was contacted, confirmed meter readings were in error, and adjusted the invoice. Savings: $17,182 Florida Tariff Provision A client installed new equipment at their facility in Jacksonville, FL. When the bill amount turned up high, Siemens investigated and found a provision in the rate for their new load profile. After checking into the type of equipment and hours of operation, Siemens was able to find annual savings. Savings: $8,000 per year Illinois Tariff Change A facility was being incorrectly billed on a residential tariff. Siemens switched the service to a small commercial tariff. Savings: $45,000 refund and continual savings of over $12,000 per year 3

4 Sustainability Reporting Establishing and maintaining a carbon inventory is another significant challenge for any organization. Primary among them is identifying, mapping, organizing and compiling the necessary data required for carbon accounting practices. Also, an organization s carbon accounting practices must evolve yearover-year as operations change, facilities are acquired and divested, and as voluntary and regulatory reporting requirements change. Working with an energy procurement expert who is well versed in sustainability reporting removes the burden from your team and ensures the accuracy of: Enterprise Carbon Accounting Sustainability Reporting and Program Implementation Supply Chain Greenhouse Gas (GHG) Emissions Requirements Management Carbon and sustainability reporting requirements are highly varied. Internal reporting expectations differ not only from one organization to the next, but significant variations often exist within an enterprise. Carbon accounting regulations impact a range of emitters from large industrials to commercial enterprises. Within the U.S., several states and municipalities have carbon disclosure requirements, and at a federal level, the U.S. EPA Mandatory Reporting Rule for Greenhouse Gas Emissions targets large emission sources associated with direct fuel combustion and other industrial processes. Multifacility organizations are often driven by business partners, customers, investors, and NGOs to account for carbon and sustainability performance. Additionally, the EPA s Clean Power Plan (CPP), as it is has been proposed, will create a landscape where electricity supplied to end-users will have a reduced carbon impact. Generators serving your local electric grid will be driven to produce electricity with fuels that have a lower carbon impact. From a carbon accounting standpoint, establishing a baseline carbon footprint now will allow your organization to track and report on the benefits associated with the planned greening of electricity supply. From a carbon accounting standpoint, establishing a baseline carbon footprint now will allow your organization to track and report on the benefits associated with the planned greening of electricity supply. If you are a Siemens Site Controls customer, you have the benefit of both the Site Controls system for sustainability performance tracking and reporting capabilities and also the expertise of the Client Services team. Working with Client Services, Siemens sustainability experts can guide you through the complex landscape of reporting standards, data management processes, benchmarking, meaningful KPI and goal setting, peer comparisons, communication practices, and much more. The sustainability capabilities of Site Controls are supported by certified GHG Inventory Quantifiers (GHG IQ) with expert knowledge in the areas of GHG inventory design, application of various GHG emissions accounting protocols, sustainability, and data collection and management. Fifty-nine percent of the Fortune 100 and nearly two-thirds of the Global 100 have set GHG emissions reduction commitments, renewable energy commitments,or both. Source: David Gardiner & Associates, Power Forward. Why the World s Largest Companies are Investing in Renewable Energy 4

5 Centralized Control Through an Intelligent Platform Monitoring building system performance, energy demand, and energy supply can be more effective and efficient than ever through a single, integrated platform that brings together key building analytics, real-time accessibility, and visibility into the long-term performance of all of your facilities. Consider the advantages of a comprehensive energy and operational performance platform that encompasses both energy supply and demand analysis and then turns that data into actionable information for optimized efficiency. Site Controls TM Enterprise Portal A cloud-hosted, open architecture solution that offers analytics and operational dashboards to enable real-time visibility and control across all locations. In addition to performance dashboards viewed through an Enterprise Portal, Site Controls includes Application Programming Interfaces (APIs) to support machine-to-machine integration to existing information systems, such as work order management applications. Supply Side Market conditions The power grid Oil Natural gas Renewables Storage Demand Side HVAC, lighting, refrigeration, signage, sensor and power metering monitoring/control Enterprise schedule administration (store special events, restocking, holiday hours, after-hour refurbishments) Advanced equipment performance analytics Energy outlier identification and resolution Weather Dispatch double check (Properly identified problem? Was a service call necessary? Was the work actually performed?) Reducing Total Energy Cost with an End-to-End Intelligent Infrastructure Many, many components need to work together to optimize the performance of all of the buildings in your enterprise. Siemens believes in an end-to-end solution that integrates supply management activities with environmental and energy efficiency goals to reduce total energy cost. Implementing a strategic, symbiotic relationship for managing energy supply and demand can help retailers meet their goals for reducing spend, mitigating risk and increasing the efficiency and sustainability of their operations. When selecting an energy supply procurement expert, be sure to partner with someone who can prove a deep understanding of the factors that affect energy prices and supply and help you achieve your corporatewide objectives. Be sure to look for expertise that includes: Market knowledge Robust data management tools Integration capabilities for real-time accessibility Proven track record of success For more information on the procurement and management of your energy supply, please call , or retail.commerical.services.industry@siemens.com Never miss an issue! Bookmark to quickly find previous editions of our SPARK newsletter and more information about Siemens Energy Management Systems. Part #: 153-BPS-897 5