Case Studies

Large Medical Center

Client Since: September 2006

Client Type: Hospital

Contract Type: Monthly Retainer, Full Service

Energy Portfolio under CES Management:

  • Over 50 million kWh of electricity
  • Over 250,000 MMBtu of natural gas

Highlights:

  • Development of detailed annual energy budgets
  • Design of strategic energy procurement plan
  • Assistance with understanding competitive energy markets and timing
  • Administration of the competitive bid and supplier contracting processes
  • Contract terms and conditions negotiations with suppliers
  • Fuel conversion analysis
  • Bill Audit

Relevance

With the help of CES, the Medical Center has been able to dramatically lower both power and fuel costs each year. Energy procurement is now evaluated as an integrated whole instead of a series of independent and unrelated decision points associated with the end of each commodity contract. CES maintains detailed budgets that allow the Medical Center to know at any point in time what its current hedged and at-risk positions are for the next 2 fiscal years. Decisions about strike prices and hedge terms on one commodity are informed by how much risk remains in the integrated energy portfolio. A disciplined procurement strategy, approved by a wide group of stakeholders within the Medical Center, allows CES to take advantage of normal market volatility. Clearly defined strike prices for discrete slices of the energy budget allow incremental price locks to increase the percent hedged position while allowing room to benefit from future price declines. Adherence to the approved strategy also allows the Medical Center to avoid hedging during high priced periods. Quarterly meetings and progress reports on strategy implementation provide a regular feedback loop between CES and the Medical Center. An annual review of actions and results allows modifications to the procurement strategy each year to best take advantage of changing market conditions and the evolving budgetary goals.