As energy markets have deregulated, suppliers have expanded the types of supply contracts offered to commercial and industrial consumers beyond the traditional fixed-price agreement. These new supply contracts are designed to provide greater control over energy commodity prices by allowing you to purchase your requirements in defined increments (blocks) during the term of your agreement, as opposed to fixing everything at the time of contract execution.
These variable supply contracts have different names (flexible, indexed, click, tranche) in different markets. Many also provide enhanced features, including locking and unlocking of purchases. They typically share, however, a common element, making you responsible for assessing markets and making block purchasing decisions throughout the term of the contract.
When should you make energy purchases under your flexible supply contract?
How much of your future requirement should you cover as part of an individual or series of purchases under your flexible supply contract?
How far out into the future should you make purchases under your flexible supply contract?
The idea of gaining greater control over energy commodity costs as well as increased flexibility to address operational changes is appealing to most commercial and industrial businesses. However, the responsibility for building and maintaining the resources and systems to monitor and assess market pricing, following existing and proposed legislation, and make final purchasing decisions can be challenging.
NUS provides organizations with flexible supply contracts end-to-end support designed to manage their risks and responsibilities while maximizing savings opportunities.
Identify your risk tolerance and procurement objectives.
Draft detailed strategic energy risk management plan.
Continuously monitor markets against SERMP price triggers and report.
Coordinate with you and suppliers to affect energy block purchases.
Report on market conditions, price developments, and open positions.
The cornerstone of our solution is the development of a detailed and tailored strategic energy risk management plan (SERMP). A typical SERMP will detail your procurement objectives and risk tolerance, supply contract terms and conditions, governance policies, purchasing triggers, transacting procedures and authority, sample position reporting, exceptions for adverse events, and supplier selection criteria. For international organizations, our local market specialists will create a SERMP for each country in which you operate to ensure alignment between your corporate sourcing objectives and the available local market purchasing mechanisms and regulations. Each of these local SERMPs will be consolidated and managed on a centralized basis.
By implementing the NUS solution, you will optimize your procurement performance and ensure that you have a documented and auditable energy risk management process that complies with any internal governance requirements.