Fundamentals of Energy Outsourcing

Abstract

As states around the country begin allowing retail customers to
choose their electricity provider, industries of all types, shapes, and
sizes are becoming concerned with the question of preparedness. Will
my company be prepared when the day comes? What are the risks?
What’s the upside? What’s the downside?
These are questions that must be asked and more importantly
must be answered now. Planning for this major change in the energy
industry will require most companies to devote a three-year effort be-
fore they will be totally ready for all systems to operate smoothly. It is
essential that a company begin as early as possible. In most cases, out-
side help will be required and should be hired early into the program
(during the initial planning stages).
To cope with many of these changes in this era of downsizing,
rightsizing, restructuring, etc., companies are considering outsourcing
their total energy requirements, not only electricity, but also natural
gas, and other energy-related commodities.
This article discusses the fundamentals of outsourcing, how to
prepare for outsourcing, and what to look for in an outsource com-
pany. Pitfalls and issues of concern that should be considered prior to
entering into agreements with an outsource company are identified.