Kinect Energy - Electricity and Natural Gas
- The Sourcing Alliance Program
- Why Energy?
- Procurement Process
- Tools & Tips
- Getting Started
Buying electricity and natural gas used to be simple. Why? Because you had one electricity provider and one natural gas provider available to you. Your state’s public utilities commission set the rates that you would pay. There was no choice, and no competition. Buying through regulated monopolies was easy, right? Expensive, but easy.
With deregulation, everything changed. Now, electricity and natural gas buyers have choices. Lots of choices. Too many choices. There is a whole new market, with suppliers, agents, brokers, and consultants all vying for your business – aggressively.
Deregulating energy marketplaces to create competition and reduce prices sounds great, but the law of unintended consequences has reared its ugly head. With so many options, how do you identify the right solution for your organization? Should you buy direct from a supplier? Use an agent? Hire a consultant? For how long should you lock in prices? Or should you use a layering or hedging strategy? How do you know that you’re getting the best price? Who can you trust?
Kinect invests heavily in educating its clients before making recommendations or implementing any solutions, provides them with account management tools and assistance, and works with many public sector entities, private companies, non-profits, and various associations.
Kinect successfully delivers the broadest range of electricity and natural gas supply solutions to clients. From fixed-price solutions, to guaranteed-savings products, and complex variable-priced, blended energy pools, Kinect’s broad range of choices enables clients to fully benefit from the deregulated energy markets. Kinect’s management team has over 250 years of energy supply, utility, and regulatory experience, enabling it to provide market-leading consultative service.
Sourcing Alliance Developed a Better Alternative for Our Members
A group of community colleges unsuccessfully invested two years of time and resources trying to develop a shared solution in anticipation of deregulation. With time running out, they approached Sourcing Alliance and asked us to develop a best-in-class energy procurement program. Our procurement team engaged a long-time energy expert to help us evaluate the available options to design a program that would best meet our members’ electricity and natural gas needs. We ultimately concluded the optimal solution was to partner with a third-party, independent energy procurement management firm to design and procure customized solutions for each individual member. We required the winning consultancy to provide:
- Member Education – a proven track record of educating clients about the nuances of the energy industry, and the range of alternatives from which to choose. For example, locking in rates to achieve budget certainty, layering strategies, maintaining contract flexibility to take advantage of possible future price decreases, and deploying a hedging strategy to protect against future price increases.
- Custom-Designed Solutions – a team of specialists that develops a customized solution for each member after analyzing that member’s i) energy consumption (e.g., load and demand), ii) financial objectives, and iii) strategic objectives.
- Compliant Procurement Processes – an intensive, multi-round procurement process conducted in accordance with statutory requirements that sets suppliers against each other to secure the lowest pricing and best contract terms for each individual member.
- A Broad Portfolio of Services – procurement of electricity and natural gas plus other value-added services, such as electricity demand response, energy billing audits, and demand-side management.
- Size & Credibility – a large and diverse customer base whose buying power will secure better pricing for Sourcing Alliance members, a critical mass of employees to service Sourcing Alliance members, a demonstrated history of placing business with numerous suppliers, and public sector procurement experience.
- Customer Service – in-house customer service center to respond to program participants’ needs.
- Geographic Scalability – licensed to serve Sourcing Alliance members in all deregulated states.
Why Did Sourcing Alliance Select OnDemand Energy/Kinect Energy?
Sourcing Alliance and a group of members evaluated eight potential suppliers against our program criteria. We conducted extensive research, detailed reference checks, and intensive interviews with multiple potential partners before selecting OnDemand Energy/Kinect Energy (“Kinect“) as the provider of energy procurement management services for Sourcing Alliance members. Kinect provides:
- Client Education – a long-standing belief that the best energy customer is a highly educated one. Kinect educates its clients through one-on-one interactions, webinars, conference calls, conferences, and e-communications (e.g., emails, newsletters, advisories, and alerts).
- Custom-Designed Solutions – a comprehensive approach to analyze a client’s energy consumption patterns and financial and strategic objectives as the basis for developing the optimal solution design for that client.
- Rigorous Procurement Process – a proven procurement process that begins with soliciting bids from multiple suppliers, continues with extensive negotiations and re-pricing, and concludes when Kinect has achieved the lowest possible price and best available contract terms.
- Compliance – procurement of electricity and natural gas contracts for public sector entities in accordance with statutory procurement guidelines.
- Buying Power – enormous buying power of over 15 billion kWh and Mcf.
- Robust Portfolio of Services – offers both electricity and natural gas procurement management services, tariff analyses, load shape analyses, shadow meter testing, energy bill audit services, sales tax proration services, energy budget forecasting, thermal imaging services, power quality analysis/correction, demand response, and energy and peak demand reduction.
- Public Sector Experience – a large public sector client base (including all types of educational institutions and local governments) and extensive public sector procurement experience.
- Capabilities & Resources – an in-house customer service center to respond to program participants’ needs, ongoing customer education regarding changes in the energy marketplace, and internal and ongoing bill reconciliation and audit capabilities.
- National Coverage – licensed to serve Sourcing Alliance members in all deregulated states.
Why did Sourcing Alliance Develop the Electricity & Natural Gas Program?
Sourcing Alliance’s purpose is to empower our affiliates to best serve their constituents through group purchasing, shared services, and management consulting. In our group purchasing work, it is critical that we continue to refine and improve our programs to adapt to changes in the market place. These ongoing improvements enable our affiliates to leverage cutting edge, innovative solutions in their continuing efforts to improve service delivery by reducing costs and streamlining operations.
In conjunction with electricity deregulation efforts, Sourcing Alliance initially developed an electricity-only program that featured optimal pricing, contract terms, and contract conditions available through a single supplier of electricity. There was limited supplier competition in the marketplace at the time, and the 15+ affiliates participating in our electricity program steering committee agreed that this approach best suited then-current market conditions.
The market environment has changed dramatically since the launch of our initial electricity program. Based on input from numerous affiliates and our external energy industry subject matter expert, Sourcing Alliance re-designed the program to provide an electricity and natural gas (“Energy”) solution in partnership with a third-party, independent Energy management consultant. A key element of the new program is that each affiliate will receive customized pricing and contract terms through a competitive process from suppliers registered with the state best able to serve that particular affiliate.
This approach offers multiple benefits for Sourcing Alliance affiliates over the prior program:
- Expanding the offering from solely electricity to both electricity and natural gas;
- Offering affiliates the best available pricing and contract terms based on their unique needs;
- Ensuring that Sourcing Alliance’s public sector affiliates are procuring electricity and natural gas contracts in accordance with statutory guidelines;
- Enabling Sourcing Alliance to more effectively serve affiliates across the state of Ohio and in other states that have implemented deregulation policies; and,
- Providing Sourcing Alliance participants with more options and more flexibility to better meet their Energy needs.
We decided to develop a best-in-class Energy program to provide Energy procurement services to our affiliates. We sought a supplier partner that could offer these services at no cost to our affiliates, leverage its existing buying power to secure optimal Energy pricing and contract terms for affiliates, educate affiliates on an ongoing basis about changes in the Energy marketplace, and work with affiliates to develop and implement strategies to manage energy purchasing going forward.
The Procurement Process
Sourcing Alliance developed detailed criteria for evaluating potential third-party, independent Energy management consultants, including:
- Broad Portfolio of Services – procurement of electricity and natural gas and other value-added services, such as electricity demand response, energy billing audits, etc.;
- Pricing Approach – individual pricing process for each affiliate with quotes from multiple registered suppliers in accordance with statutory requirements, availability of existing aggregation pools as an additional option for affiliates, block and index pricing options, and individual layering options;
- Size/Credibility – a large and diverse customer base, a critical mass of employees to service Sourcing Alliance affiliates, demonstrated use of multiple suppliers for existing client base, public sector experience and existing customers, and experience and existing partnerships with associations;
- Capabilities/Resources – in-house customer service center to respond to affiliate needs, internal and ongoing bill reconciliation and audit capabilities, and monthly reporting capabilities that meet Sourcing Alliance requirements; and,
- Geographic Scalability – across Ohio and into other states that deregulate Energy markets.
In an exhaustive process, Sourcing Alliance evaluated eight potential suppliers against these criteria through interviews, online research, conversations with affiliates, and in-person meetings.
Why did Sourcing Alliance Select OnDemand Energy/Kinect Energy as our Supplier Partner?
Sourcing Alliance selected OnDemand Energy/Kinect Energy (“Kinect”), to serve our affiliates as our third-party, independent Energy management consultant. Kinect is one of the largest (in terms of kWh and MCF volume) Energy management consultants in the country, works with more than 20 different suppliers, invests heavily in educating its clients before making recommendations or implementing any solutions, provides ongoing tools and assistance to clients, and works with numerous public sector entities and various associations.
Kinect’s Energy procurement services for electricity and natural gas include:
- Analyzing affiliates’ utilization of electricity and natural gas;
- Educating affiliates about their Energy procurement options;
- Identifying strategies and purchasing options to optimize affiliates’ Energy pricing and mitigate current and future market risks;
- Securing Energy price quotes and contract terms through a competitive procurement process from multiple suppliers capable of providing Energy to individual affiliates based on their geographic location, specific demand requirements, and other
- Reviewing price quotes and contract terms received from suppliers for each affiliate;
- Developing and presenting Energy procurement recommendations for each affiliate from the pool of price quotes and contract terms received in the bidding process;
- Negotiating final contract terms between each affiliate and the selected supplier;
- Monitoring the pricing charged to affiliates by suppliers to verify suppliers’ contract compliance;
- Educating affiliates regarding ongoing changes in the Energy market; and,
- Recommending changes in Energy purchasing strategies to affiliates as warranted by Energy market changes on an ongoing basis.
There is no cost to Sourcing Alliance affiliates for any of these Energy procurement services.
In addition, Kinect offers a wide range of Energy management services to affiliates on a case-by-case basis, such as: tariff analysis, load shape analysis, Energy audit services, Energy and peak demand reduction, audit demand response, etc.
For more details on each of these services, see the Kinect Energy website.
While strict adherence to energy conservation methods can help reduce energy costs, we found that reducing the price you pay for your energy supply is an equally effective and far more immediate strategy to control costs. Buying your typical usage at a lower negotiated price can translate into real cost savings for large- and small-scale users. OnDemand/Kinect has saved its clients more than $100,000,000 in energy costs over the last twenty years.
If you are looking to reduce your energy costs, consider negotiating your kilowatt per hour (kWh) or Mcf price with your local energy producers:
- Request prices and contract terms from at least three energy suppliers licensed in your state.
- Negotiate with energy suppliers with the lowest cost per kWh as your starting point, then ask suppliers to drop their prices from that starting point.
OnDemand/Kinect performs these two critical services for Sourcing Alliance members at no charge. Why invest your valuable time and resources on these tedious, but necessary steps when OnDemand/Kinect’s experts will do it for you?
Please contact Sourcing Alliance by telephone at 216.581.6200 or by email at info@SourcingAlliance.org with any questions or for clarification. We are here to help make this process easier for our members.
To learn more about Sourcing Alliance’s energy procurement management services with OnDemand/Kinect, call or email Sourcing Alliance today. Contact Sourcing Alliance by telephone at 844.289.6728 or by email at info@SourcingAlliance.org.
Download or print a detailed description of how to Get Started with Sourcing Alliance’s energy procurement management program with OnDemand/Kinect for your electricity or natural gas needs here.
To get started:
- Complete and Sign the Letter of Authorization (LOA)
- Secure one month’s copies of electric utility and/or natural gas bills (all pages)
- Send the LOA and copy of your bills via fax to 866.306.7929 or email to firstname.lastname@example.org
To receive more information or to speak to an energy professional, call the dedicated Sourcing Alliance line at OnDemand/Kinect: 855.900.3637