Energy Partnerships - value beyond just cost savings

18 Dec 2010Archived News Climate Change Matters

The current softness in the wholesale electricity futures market is presenting customers with significant savings opportunities on a financial level. This is especially the case for those users coming out of contracts negotiated during the price spikes in 2007. This is by no means current news as futures prices have been steadily trending downwards in all NEM regions for the better part of a year.

So what new opportunities (if any) exist in this current trading environment? As Energetics’ Principal Consultant in energy and carbon markets, Tim Hobson explains; "many of Australia's most creative and innovative energy users are taking advantage of the very close competitive environment between retailers. There are significant value-added services to be gained from retailers that do not entail direct cost savings per se, but can deliver further financial benefits throughout the procurement process and contract relationship".

In conjunction with some of its major clients, Energetics has developed the Energy Partnership Evaluation Matrix (EPEM). This is a comprehensive tool that incorporates a number of qualitative criteria into the decision making process and are not conventionally considered as key considerations in the tender evaluation process.

Essentially EPEM incorporates a number of flexible evaluation criteria with respective weightings assigned to each. In an environment where pricing offers are within 1%-2% of each other, this allows customers to establish what non-price criteria is important to them, and how important each criterion is.

Figure 1 below is a snapshot of an EPEM tender evaluation output. In this case, it shows a customer heavily focussed on mitigating legal risks and strong customer service credentials. It also shows a retailer that can offer a suitable gamut of value-added energy services other than just account management.

Figure 1 – EPEM Tender Evaluation Output

For ease of decision making, EPEM calculates an end score from 100 for each retailer and allows for comments to be added for each retailer’s performance across all evaluation criteria.

In addition to driving extra value for customers, EPEM is making inroads into changing the traditional electricity retailing paradigm where the key focus has primarily been cost. The inclusion of better services and initiatives to drive additional value across an electricity portfolio is becoming far more attractive for many energy users.

For more information on EPEM and how it can be incorporated into your next tender evaluation process, please contact your account manager.

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