Purchasing Energy in a Dynamic Market

Abstract

Reliable and reasonably priced energy is a critical need for any busi-
ness enterprise. The larger a venture, the higher the sensitivity of energy
cost for its financial health. Energy costs have risen steadily for last dozen
years, according to the U.S. Department of Labor (DoL) actual data, and
will continue so for next 20-25 years, forecast by the U.S. DoE. Energy
cost has been a factor in siting decisions for energy-intensive produc-
tion or process facilities, as seen in migrations from the industrial belts
in north to the southern states where energy was cheaper. To their credit,
the utility companies and local government authorities formed economic
development councils to attract local business growth, and they showed
positive results. That is the supply side of the market: energy providers
and promoters. on the demand side, end-users should also hone their
skills to get the best out of the market. The good old days of state-regulat-
ed price stability have been replaced by a high degree of price volatility.
Buyers look at the energy market for the best rates to keep their energy
costs down, as do utilities; both compete in the same market. Understand-
ing trends and projecting the future is essential for the energy managers
and buyers today. When states set the cost rates, they were stable, so it
was easy to fit the cost into business models. In today’s market, the end-
users have to compete more effectively in their product market.