Non-profit Finds Stability, Expertise, and Savings in Energy Supplier

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Situation

In 1997, the Pennsylvania Energy Consortium (PENCON) was formed as a non-profit to provide cooperative purchasing of energy supplies for public schools, local governments, churches and other non-profit/government organizations. After reassessing its energy procurement strategy, PENCON selected Direct Energy during this competitive solicitation based on the value they could bring the consortium, their stability and their extensive experience with schools in Pennsylvania and nationally.

A New Energy Strategy

As the 2010 expiration of PP&L’s transition period neared, energy market conditions were such that it was clear that traditional fixed pricing would not offer the value schools sought for their energy dollars. The natural fluctuation of energy prices made it difficult to pick the “best” day to set pricing. Also, PENCON wanted to help its members capitalize on schools favorable usage profile. Electricity pricing favors schools since they tend to use less power during the summer and that peak during the morning and early afternoon, thus avoiding the most expensive late afternoon/early evening hourly rates.

In response, Direct Energy Business offered its PowerPortfolio® approach. It enabled PENCON to build a portfolio of long and short-term supply purchases. The forward purchases are selectively made when market conditions are optimal and the balance of the usage requirement is satisfied by prudent use of the hourly market. PENCON is assisted in this effort by a Portfolio Strategist, an experienced energy professional that monitors market conditions and provides informed guidance to help PENCON make informed decisions.

Results

Direct Energy Business and PowerPortfolio helped PENCON save over 2 million dollars in 2010*. It also enabled PENCON members to avoid being locked into a long term fixed price contract as energy markets continued to decline through 2009 and 2010. PowerPortfolio also allows smaller organizations to aggregate and achieve economies of scale by purchasing electricity in programs otherwise only available to larger end-users. The flexible nature of this methodology also was attractive to PENCON as it is now able to add additional members throughout the year.

 

 

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