Have You Evaluated Your Natural Gas Strategy Lately?
Most businesses want to find ways to improve operational efficiencies and make a positive impact on their bottom line. What many overlook, however, is that strategically managing your natural gas purchasing can help you do just that.
If you currently view your energy use as just another bill to pay, you may want to look a little closer. You could achieve budget goals by reviewing your current natural gas strategy to ensure you’re getting the most out of your energy – and that you’re managing risk tolerance the right way for your business.
Think about how many manage their 401k – through a diversified purchasing strategy that takes a forward-facing approach to risk management. This type of strategy allows you to manage price and risk over the long-term. You can choose the amount of your natural gas volumes that you want to lock over time and you can be as involved or hands-off as you want to be.
This is the approach a customer recently took after discovering an issue on their natural gas invoice.
How One Company Corrected A Problem by Using Constellation’s Managed Solution
A new CEO was recently hired at a growing agricultural supply company to improve the management of their operation and financial results. The new CEO found inefficiencies and poor management including their energy strategy. The company uses a substantial amount of natural gas to control the moisture content of their product. The company runs several production lines with three shifts and a 24/7 operation.
The CEO, Plant Manager and Finance Manager all met with Constellation. The meeting began with a tour of the facility, which was critical in understanding how natural gas was used within the company’s operation and how the cost of natural gas impacted their bottom line.
The next step was to review copies of the company’s current bills so Constellation’s Business Development Manager could assess the current situation. An analysis of the customer’s invoices showed an issue with over nomination of monthly gas volumes, which was negatively impacting the customer’s natural gas cost and their bottom line.
A natural gas managed solution option was introduced to their team. Constellation’s SmartPortfolio program is a strategy that can effectively manage monthly variations in gas usage and price risk over time. The CEO liked the diversification and risk management aspects of the program. However, due to committed sales contracts with his customers, the CEO wanted to be able to manage 50% of the company’s gas volume with a fixed price at his discretion. The SmartPortfolio program is flexible enough to accommodate that need. The CEO can manage 50% of his volume outside of the program and Constellation manages 50% of his load inside the managed solutions program.
Constellation helped the company with a natural gas analysis and provided market intelligence. Although the company was under contract with a different supplier through March 2019, Constellation could begin layering in positions immediately.
A thorough evaluation of your natural gas strategy could lead you toward better solutions with Constellation. If you’re interested in learning more about our SmartPortfolio program, reach out to us today.
Guest Author: John Oroni, Vice President & General Manager, Natural Gas – Central Region
John is responsible for financial performance and sales in the Central region, which covers twelve states and includes a sales staff of over 20 energy professionals and 2 sales managers. John has extensive experience in utility tariffs, regulatory intervention, risk management, budget and cash flow analysis and supply sourcing strategies.