Successful Negotiation Lowers Regulated Utility Costs by Nearly 9%
Enhancing Profitability Through Reduced Operating Costs
A food ingredient plant in the Midwest was looking to improve profitability by reducing their operating costs. The plant manager selected Cargill Energy and Risk Management Solutions for recommendations to lower their utility spending.
Finding Opportunities in a Regulated Market
Operating within the confines of a regulated market, the plant’s utility supplier was a predetermined monopoly. However, the utility offered its industrial customers a complicated array of pricing structures to choose from. CERMS conducted in-depth load analysis using hourly interval data, concluding that the current variable, realtime rate was no longer advantageous based on a market analysis and the plant’s usage level. The utility’s published tariff book offered few alternatives for the plant’s favorable load profile.
Leveraging Expertise Toward a Successful Negotiation
The CERMS team conducted extensive negotiations
with the utility, centered on several key issues. Our
customer’s objectives were to obtain a rate below
the published tariffs and avoid a proposed seven-
figure service deposit. The utility wanted the plant
to shut down onsite power generation, which the
utility viewed as competitive.
CERMS leveraged our unique insights into the
energy market and skills in contract negotiation to
give our customer the edge. When negotiations
were concluded, the utility had agreed to a
significantly discounted energy contract – saving
the plant $468,000 annually – and a letter of credit
in lieu of the cash deposit. In return, the plant
agreed to shut down the generator.
Adding Value Through Industry Knowledge & Expertise
Unlike some consultants, Cargill Energy and
Risk Management Solutions excels at obtaining
and using exceptionally detailed analytics. That
expertise translates into a deeper understanding
of customer needs, more accurate benchmarking,
better negotiating leverage and more informed
regulatory insight. Whether you operate in a
regulated or deregulated market, we can give you
every possible advantage.
Contact Eric Hoegger, Cargill Energy and Risk Management SolutionsSM, at 952-984-4025 or Eric_Hoegger@cargill.com.
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