What Can We Do About Our Cost of Power?

With the soaring cost of fuel recently, many of our clients are asking us “what can we do about our cost of power?”  While a particularly timely question, it is actually a good question to ask anytime considering the sheer magnitude of the costs involved – approximately 60-70% of your members’ bills can be directly related to the cost of power. 

Several questions related to your cost of power merit addressing:  How efficient are our existing power supply resources relative to others?  Are the resources “right” for our load, or are they tailored more to the needs of others?  Is there something we can do to improve the situation?  What other supply options are out there?  Is transmission an issue? 

The answers to those questions will help cooperative managements and boards better understand this key cost area.  If your power supply arrangements are within 10 years of expiration or term extension option – perhaps driven by a need to build/buy new generation – additional questions arise:  Would a proposed term extend well beyond the life of the existing resources?  If so, what will replace these resources?  What are the pros and cons to extending our current wholesale power contract?  What opportunities are associated with a contract extension? 

At EnerVision, we have helped our clients in all sorts of situations better understand their power supply and uncover opportunities to improve power supply flexibility, reduce risk, and/or reduce power cost.  As we’ve worked with clients, we’ve discovered that many cooperatives would benefit greatly from a high-level power supply assessment.  Hence, we developed the Power Supply Diagnostic Report to provide clients with a professional “scorecard” that evaluates the risk, competitiveness, and flexibility of their current wholesale power supply.  It also summarizes our thoughts regarding opportunities that may be worth exploring.  Using the client’s own data, coupled with other publicly available data, EnerVision confidentially examines each of what we call the six key aspects of power supply – all without impacting relations with their current supplier or committing to change. 

Our Power Supply Diagnostic Report is designed to be useful regardless of your power supply situation, whether or not you are involved in a contract negotiation/extension process.  It provides a high-level review of your most significant expense – supporting your Management or Board of Directors in their fiduciary responsibilities. It may represent the first step in adding value to your members by improving your wholesale power supply situation which, again, represents 60-70% of their costs.  

For more information about the Power Supply Diagnostic Report and/or other questions/issues you may have surrounding your power supply situation, please contact Elaine Johns at (888) 999-8840 or e-mail her at elaine.johns@enervision-inc.com.