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See How These Customers Were Protected When ERCOT Prices Spiked

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In August 2019, many Texas energy customers were hit hard when prices spiked in the ERCOT market. A perfect storm of hot days, a lack of wind generation and depleted reserve margins caused prices to hit the $9,000 per megawatt-hour cap. As a result, customers on a market-based pricing structure saw a massive increase in their energy cost.

However, not all Texas-based facilities faced the same sudden price increases. Several of our customers were already prepared for this exact situation thanks to some strategic planning we did together. We’ve selected some of the best ERCOT success stories among our Texas customers to show how strategic electricity purchasing can protect your facility’s energy budget.

A Well-Timed First Layered Purchase

After they were recently acquired, an industrial processing plant wanted to reconsider their energy plan to meet the standards of their new parent company. The company had been operating fully on market prices and would have been hit with the steep $9,000 per MWH price.

Fortunately, when considering options, their sales representative at Direct Energy Business recommended signing up for PowerPortfolio®, our electricity procurement solution that allows for layered purchases, and putting in a 50 percent hedge for their summer load of 10 MW. Because their energy rates were locked in at the right time, the company is estimated to have saved more than $1 million in electricity costs for August 2019.

Long-Term Strategy Pays Off in Texas

On the other hand, a manufacturer was able to avoid the price increase by being very involved in demand management. The facilities team hold weekly meetings with our energy strategist to discuss the weather and prices of the week. Based on the conditions expected, the manufacturer will shift their production and maintenance schedules. Because they knew the summer is always a volatile market, the manufacturer used our PowerPortfolio product to hedge 45 MW in the summer to capture the best value.

For the week of the August 12, ERCOT price spike, our team’s recommendations led the manufacturer to shift their load down to 7MW. In addition to the previous hedge, our team’s recommendation to lower consumption allowed them to save more than $1 million and remove strain from the grid during those peak days.

A Technological Advantage for Electricity Procurement

A water district that also uses layered purchases through PowerPortfolio was able to avoid real-time market exposure. With multiple long-term hedges in place, the district was already taking a conservative approach with a robust Four Coincidence Peak program that would have offered protection from the sudden price volatility in August 2019.

However, they also used the Energy Insights technology from our sister company, Centrica Business Solutions that includes self-powered, wireless sensors to monitor energy consumption and provide real-time information and alerts when demand reduction opportunities are present. As a result, they received alerts to curtail their usage and shed 10 MW during the peak hours in August 2019. Thanks to the combination of strategies from these two products, the district is estimated to benefit by $1.75 million.

Your Enterprise Could Be Next

These stories of significant savings at the most volatile pricing event in ERCOT history show that it’s important for Texas enterprises to implement an electricity procurement strategy. Considering the current conditions for index volatility are expected to be present in the future, implementing a strategic electricity solution that fits your enterprise is the best protection from another budget-busting day in the ERCOT market.

Protect your energy budget from unexpected costs.

Posted: September 27, 2019

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