Strategies for Rate Optimization

To maximize value for Commercial & Industrial (C&I) clients in complex deregulated energy markets, brokers and consultants should employ a range of proactive, data-driven strategies.

1. Active Peak Load Management

  • Implement monitoring and controls to shave both non-coincident peaks (reducing monthly utility demand charges) and coincident peaks (reducing future capacity/transmission tags like PLC/ICAP).
  • Use peak prediction services (especially in PJM, NYISO, ISO-NE) to target curtailment during critical system peak hours. Even brief reductions yield significant annual savings.
  • Educate facility managers and consider automated controls or battery storage for peak shaving.
  • Track load factor (Avg Load / Peak Load) as a key performance indicator.

2. Strategic Hedging & Portfolio Approach

  • Treat energy procurement as managing a portfolio, not a single transaction.
  • Utilize block-and-index contracts, seasonal forwards, or laddering strategies to balance budget certainty and market opportunity based on client risk tolerance.
  • Hedge capacity and transmission costs where feasible (e.g., fixed capacity rates vs. pass-through).
  • Continuously reforecast load and budget; adjust hedges based on operations and market fundamentals. Hold regular strategy reviews.

3. Maximize Demand Response & Incentive Programs

  • Actively enroll eligible clients in ISO/RTO and utility Demand Response (DR) programs to earn payments/credits for curtailment capabilities.
  • Explore new aggregated DER participation opportunities emerging under FERC Order 2222.
  • Leverage state/utility incentives for energy efficiency, demand management tech, battery storage, or power factor correction to reduce demand charges and project costs.
  • Act as an integrator, identifying and stacking value from multiple available programs.

4. Optimize Tariff Rate Selection

  • Ensure clients are on the most advantageous utility delivery rate schedule available (e.g., standard vs. TOU vs. peak-sensitive options).
  • Analyze interval data to model costs under different tariffs.
  • Investigate applicability of special riders (e.g., economic development, interruptible service, standby rates).
  • Advocate with the utility for correct rate classification, demand levels, and power factor adjustments.

5. Leverage Technology & Data Analytics

  • Provide clients with real-time monitoring tools (dashboards) for usage, costs, and carbon footprint.
  • Use analytics for cost attribution (breaking down bill components) to identify key cost drivers and savings opportunities.
  • Identify load shape patterns (e.g., flat vs. peaky) to inform procurement strategy (index vs. fixed).
  • Benchmark facilities in multi-site portfolios to find inefficiencies.
  • Transition from energy seller to data-driven energy advisor.

6. Proactive Risk Management & Contract Flexibility

  • Educate clients on various risks: market volatility, regulatory changes, supplier credit risk, force majeure events.
  • Vet suppliers for financial stability. Diversify suppliers for large portfolios.
  • Negotiate protective contract clauses where possible (e.g., caps on pass-throughs, blend-and-extend options, clear handling of new regulations/taxes).
  • Maintain a risk register outlining client exposures and mitigation plans.

7. Integrate Sustainability with Procurement

  • Align energy strategy with client ESG goals.
  • Facilitate procurement of renewable energy (RECs, PPAs, green tariffs) in coordination with commodity strategy.
  • Advise on certifications and reporting standards (REC retirement, Scope 2 emissions).
  • Provide transparent reporting on the emissions impact of different supply options.
  • Explore options that optimize both cost and carbon, potentially using internal carbon pricing metrics.

By adopting these holistic strategies, energy brokers and consultants can move beyond simple price comparison to become indispensable partners, helping C&I clients navigate market complexity, control costs, manage risk, and achieve sustainability objectives.