In deregulated markets, Prenova provides customers with visibility into price trends at the global, national, and local levels to reveal the interrelated cause-and-effect in regards to market prices available across the customer’s portfolio. Prenova’s tools allow for the creation of a customer’s risk profile, and the price discovery and related strike prices by market that are in compliance with that risk profile. Prenova then executes its Price Risk Management (Supply) solution to execute on selected price contracts for generating predictable financial performance in times of unpredictable market events.
Problem: How can a company be confident that they have secured the optimal price for energy given the volatile energy market and the company’s risk profile? How does a company even define their risk profile, and how are the workings of that profile best applied to supply opportunities as they arise across deregulated markets?
Solution: Prenova’s Price Risk Management (Supply) solution is an end-to-end process for managing energy price volatility in deregulated markets. We are a totally independent, neutral agent representing only the interests of our customers in all our dealings. We neither hold ownership in, nor are we owned by any energy supplier or utility. We receive directly from our customers any fees due for value created. There are no other supplementary financial arrangements with any other providers in the supply chain. Prenova is vendor-neutral. This ensures our ability to select and recommend the best of all available price solutions to maximize advantage to our customers. Prenova takes a four-phase approach to supply management to ensure our customers receive the best price.
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We use various factors in determining which suppliers have the capability of providing third-party supply to the customer at the desired level of service, with a variety of supply products that meet the customer’s risk criteria – and at competitive rates. Prenova solicits and obtains responses to RFP’s from the broadest range of potential suppliers. Different from other providers, Prenova also has a unique and experienced staff of energy experts that are continually able to leverage the lowest cost opportunities from the marketplace. Repeated interaction with key supplier organizations allows Prenova’s supply management staff to understand the sales culture of a supplier organization.
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The supplier that is selected from the procurement process short-list is done so using a multifaceted decision model where the supply costs, terms, credit policies and financial quality of the supplier are evaluated and weighted. Prenova is then able to assess first hand criteria such as:
- financial strength of a supplier organization
- flexibility in negotiating changes in contracts
- flexibility in extending commercial terms, for instance, number of days to pay invoices or late payment penalty percentage rates
- security deposit policies
- letter of credit
- prepayment arrangements
These are all factored in to a final decision, along with a supplier’s competitiveness in pricing, flexibility in offering the desired product for our customer’s load profile in that marketplace and any other customer compliance criteria.
Prenova actively monitors utility energy rates and has an in-house timetable that indicates the frequency with which various utilities establish new rates and the methodology used to establish their new rates. Prenova maintains a database of our customers’ utility accounts and compares the new rates that a utility establishes with various alternate energy options available to our customers. In essence, each of the customer’s accounts has its own price to compare depending on the region, the utility, the consumption volumes of an account, the utility rate classification, and more.
Additionally, we monitor our customer’s opportunities by tracking their load profiles by location. In deregulated regions, Prenova tracks existing contract expirations, regulatory policies, changes in utility generation rates, price trends in the wholesale energy markets, and how these all impact the customer’s load profile, risk plans, and desired hedge position.
All contracts and internal reports are provided through PreVue® , Prenova’s web-based decision analytics tool.
Outcome: Prenova develops strategies and plans for managing energy price, provides price discovery and strike prices by market, recommends specific actions to our customers, executes the agreed actions and performs quality assurance to ensure energy contracts are accurately implemented. The combination of our tools, processes, technology and industry knowledge delivers 2%-4% savings as compared to published market price. |
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