Energy Procurement and Management is a lot like rocket science.
The information is vast. The issues are complicated and national in scope.
J.Pollock, Inc. Case Studies
An energy advisor can identify solutions to your critical energy problems. A qualified energy advisor must be reputable, experienced and provide accurate and timely advice to identify and assist you with implementing solutions that are both pragmatic and cost effective. To help you evaluate the services of J.Pollock, we offer the following Case Studies on projects J.Pollock has completed for clients, both in states with energy competition and those that remain regulated.
Electricity 101 Primer
A client group asked J.Pollock to develop and present The Electricity 101 Primer to a state regulatory commission. This is one example of J.Pollock’s ability to present a difficult subject in a simple and easy-to-understand manner.
Managing Multiple Sites
“Not only did this save time and money during the procurement, each client also benefitted...”
A client asked J.Pollock to advise it on how to buy electricity in Texas. For many years, the client was accustomed to paying the local utility for the electricity service provided at multiple facilities. Each facility received a separate bill based solely on the power and energy consumption. When customer choice was implemented in portions of the Lone Star State in 2002, larger electricity consumers could choose their retail electric provider (REP). What this client didn’t realize was that a REP could provide service to all of the client’s facilities located anywhere in the state where there was choice. To enhance the client’s buying power, J.Pollock recommended aggregating this client’s loads with the loads of other clients having diverse usage characteristics. As a registered aggregator of Texas, J.Pollock can represent multiple clients to procure electricity. Thus, we could conduct one RFP and negotiate one contract. Not only did this save time and money during the procurement, each client also benefitted because (1) there is less volume risk in a diverse group than buying for each client individually, (2) less “bandwidth” was needed to hedge uncertainty about the volume of future electricity purchases, and (3) a combined load of over 50 megawatts (instead of over 70 megawatts on an individual basis) was achieved. The clients paid J.Pollock a total of $35,000 in fees to conduct the RFP, instead of $10,000 to $15,000 per client. Further, they saved many times this amount during each year of the contract.
Should Have Asked
“The audit revealed that the client could have saved over $300,000 per year...”
Utilities are under no obligation to select the most cost-effective rate to serve a customer. In general, taking service at higher delivery voltages is more cost-effective, particularly for larger loads. A client operating a newly commissioned facility noticed that his utility bills were much higher than anticipated and asked J.Pollock to conduct an audit. The audit revealed that the client could have saved over $300,000 per year if service had been provided at a higher voltage. However, while negotiating with the utility to bring electricity service to the new facility, the client was not aware of the benefits of higher voltage service. Had J.Pollock been asked to assist in the negotiations, we would have advised the client to invest in the necessary equipment to take higher voltage service because the benefits of the lower rate would more than outweigh the costs. Since completing the audit, the client engaged J.Pollock to determine the optimal rates for similar facilities to be located in other states.
Utilities Do Make Mistakes
“Detecting the error cost the client less than $500. Fixing the error saved the client nearly $20,000.”
While advising a client on the costs and benefits of switching utility suppliers, J.Pollock found a discrepancy between the energy for which the client was billed by his current supplier and the hourly loads taken from the meter. Specifically, the billed energy exceeded the actual energy by 25% on two different days. Detecting the error cost the client less than $500. Fixing the error saved the client nearly $20,000.
Billion Dollar Surplus
“The current generation of customers had overpaid for the use of the utilities' investment.”
J.Pollock was retained by a group of industrial electricity users to provide expert analysis and testimony in several pending rate cases. In reviewing the testimony and exhibits filed by two electric utilities, J.Pollock noticed that both utilities had accumulated a depreciation reserve surplus totaling more than $1 billion. In other words, the current generation of customers had overpaid for the use of the utilities' investment. After reviewing past case studies and accepted depreciation practices, J.Pollock determined that using this surplus to offset a portion of the nearly $2 billion in proposed revenue increases was consistent with sound regulatory practice. J.Pollock filed testimony in these cases. The commission agreed with J.Pollock and significantly cut back the utilities’ requested increases.
Dilemma of a Make-or-Buy Decision
“This client is already buying power from the local utility at the best possible rates...”
A client asked J.Pollock to determine whether it should consider expanding its on-site generation to offset rate increases due to rising fuel prices and large capital costs for environmental improvements and new gas/nuclear capacity to meet projected demand. The dilemma is that this client is already buying power from the local utility at the best possible rates and at the time, the utility’s rates were below the national average. J.Pollock conducted a long-term forecast of the utility’s costs taking into account the projected capital expenditures and a wide range of scenarios considering future coal and natural gas prices (obtained from public sources and the client’s own forecasts) and potential carbon impacts. The forecast revealed that rates would gradually increase to a level where additional self-generation would become economic. Despite the scope and complexity of the forecast and the many different scenarios considered, the client received valuable insights and was charged less than 0.5% of the client’s annual electricity costs.
This Really Is Rocket Science
“Regulatory policies can be arcane and difficult to explain, especially to legislators and their staffs who are not familiar with electric utilities.”
A legislative coalition wanted to encourage a Southeastern state to remove barriers to expanding biomass and waste heat (renewable) generation. J.Pollock was retained to prepare a report to the state legislature explaining how current regulatory policies were forcing electricity consumers to pay a premium for new utility resources when they could pay much less for reliable renewable generation. However, regulatory policies can be arcane and difficult to explain, especially to legislators and their staffs who are not familiar with electric utilities. J.Pollock’s report explained in very simple terms how electric utilities operate, their future capacity needs, and how changing the way these generators are paid can encourage them to step up and provide reliable, lower-cost electricity for the benefits of all consumers. J.Pollock presented the report to several legislative committees and key legislators.
Can I Fire My Electricity Supplier?
“Even in some regulated areas, customers can choose their electricity supplier.”
Several states have adopted policies that allow consumers to shop for their electricity supplier. J.Pollock partners with the energy user to hire and fire a REP as necessary to obtain the best price and lowest cost for electricity. However, you may also have a choice even in regulated states. J.Pollock recently advised a client in the Southeast that had chosen to take service from an electric cooperative. That’s right, even in some regulated areas, customers can choose their electricity supplier. The choice may be as simple as where to locate the meter. The client was at the end of a long-term contract and was told that the cooperative could not provide service under the same general pricing terms. Replacement power would be priced at market rates. J.Pollock was retained to assist this client to identify options for providing reliable, cost-effective electricity after the contract expired. We conducted an RFP to determine whether any other suppliers could step up and serve the client at affordable prices. When no other alternative supplier could provide electricity at prices that would allow the client to remain in business, J.Pollock presented the case to the state public service commission. Ultimately, the commission agreed to transfer the client to another regulated supplier. This service transfer resulted in over $5 million in savings (versus only $30,000 in fees charged by J.Pollock), and just as important, it preserved jobs and other economic benefits by keeping the plant in operation.