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1. ENERGY MANAGEMENT 1. Available Informational Resources.
2. Gaining Access to Necessary Data.
3. Collecting and Organizing Available Data.
4. Defining Key Metrics and Indicies for Your Business.
5. Establishing Targets and Milestones.
6. Reporting – budgets, cost savings, program performance, sustainability (internally or externally).
2. UNDERSTANDING YOUR UTILITY BILLS (ELECTRICITY) 1. Available Resources from Your Utility Company.
2. Types of Services.
3. Rate Structures and Costs Components.
4. Taxes.
5. Regulated and Deregulated Markets.
6. Understanding Your Facilities Load Factor.
7. Power Factor Adjustments and Penalties.
8. Demands Response Programs.
9. Renewable Energy Options.
10. Utility Analysis and Auditing
SESSION OUTLINE
3. ELECTRICITY PROCUREMENT 1. Regulated and Deregulated Utility Markets.
2. Price Indicators and Market Resources.
3. RFP Process – selecting the right supplier and the right contract.
4. Types of Offerings, ancillary charges, covered costs, and pass-through costs.
5. Contract Performance and Verification.
4. ENERGY EFFICIENCY 1. Incentives – available utility study and project rebates.
2. Identifying Opportunities - onsite energy audits and engineering. studies, industry best practices.
3. Feasibility – costs and reduction targets and paybacks.
4. Project Approval, Financing, Incentives, Implementation, Commissioning, M&V.
5. BULK FUEL 1. Informational Resources ( OPIS, Platts, EIA, API )
2. Fuel Purchasing Practices.
3. Price Competitiveness within Your Marketplace.
4. Fuel Taxes.
5. Fuel Audits and Price Reconciliation.
SESSION OUTLINE
ENERGY MANAGEMENT
ENERGY MANAGEMENT Energy Management: Represents the practices and actions performed to achieve the minimum energy use and costs while still meeting or improving the energy requirements of the facility or process.
Cost Assessment
and Reduction
Efficiency & Implementation
Measurement, Verification &
Reporting
Data Collection &
Verification
1) Available Energy Related Informational Resources a) Energy Information Association (EIA)
a) http://www.eia.gov
b) Department of Energy (DOE)
a) http://energy.gov/
c) Platts
a) http://www.platts.com/
d) American Petroleum Institute (API)
a) http://www.api.org/
e) Oil Price Information Service (OPIS)
a) http://www.opisnet.com/
f) CME Chicago Mercantile Group (NYMEX)
http://www.cmegroup.com/company/nymex.html
2) Access to Energy Cost and Usage Data
Are you receiving copies of your monthly utility bills and fuel invoices ? Gaining Access:
Internally (Request data from Accounts Payable)
Externally (Establish Online Account Access with Vendor)
ENERGY MANAGEMENT
3) Collecting and Organizing Required Data
Approach depends on the program scale (1 site or 100 sites).
Can this task be handled internally or does it require vendor participation or third-party services?
Are other departments already collecting the same or similar data?
Once the data is collected and organized for reporting – determine your interested parties. (finance, environmental, operations, external organizations, shareholders, customers, etc. )
Accuracy of data is important to build and maintain sponsorship.
Without an audience there is little value in reporting.
ENERGY MANAGEMENT
Tier 1 – Are typically associated with overall company performance objectives; e.g. (lower company wide fuel costs by 5% annually, etc.).
Tier 2 – Would be tied to specific product lines or departments within your organization.
Tier 3 – Are at a specific process or equipment type level.
TIER 1
TIER 2
TIER 3
BASELINE DATA
Corporate Objectives
Divisional Goals
Plant or Process Level Goals
Set Baselines
ENERGY MANAGEMENT
4) Defining Key Energy Metrics and KPI’s
► FLEET FUEL– Mixer Trucks (GPH or gallons per yard delivered)
► PLANT ELECTRCITY (kWh’s per yard)
Direct usage – compressed air, lighting, blowers, conveyor and mixer motors)
Indirect Usage – Lighting, HVAC
► PLANT FUEL (MMBTU/dkth per yard)
Boiler fuel (diesel, propane, natural gas) per yard,
Equipment fuel usage (loader, skidsteer)
Indirect usage (plant enclosures, offices, storage space heating, etc )
AGGREGATE
ASPHALT READY-MIX
► PLANT ELECTRICITY
(kWh’s per ton)
Direct usage – crushing circuits, conveyance, pumping, etc.
Indirect use – Lighting, scale house, shops, etc.
► PLANT FUEL
(gallons per ton)
Equipment Fleet
Material heating/drying (diesel, propane, natural gas)
► ON-ROAD FLEET
(gallon per mile, per hour, per unit delivered .
► PLANT ELECTRICITY (kWh per ton)
Direct usage – Drum, exhaust fan, pumps, burner blower, tank heaters, compressor.
Indirect use – Lighting, HVAC, shops, etc.
► BURNER FUEL
(MMBTU / dkth per ton). (diesel, propane, natural gas, RFO)
► AC TANK HEATING
(kBTU per ton) (diesel, propane, natural gas, RFO)
► OFF-ROAD FLEET
(gallons per ton produced)
ENERGY MANAGEMENT
4.1) Example of Energy Performance Metrics by Product Line
To Be Successful - Energy Objectives and Performance Targets will Require Sponsorship Throughout the Organizational Hierarchy
TIER 3 - Asphalt Plant (kWh's per year)
350,000 , 29%
262,500 , 21%
247,500 , 20% 138,750 , 11%
123,750 , 10%
78,750 , 6%
35,000 , 3%
drum motors
exhaust fan
tank heater
pumps
burner blower
compressed air
indirect
TIER 2 - Asphalt Plant Annual Electrcity Usage
(kWh)
136,000 14%
680,000 72%
85,000 9%
45,000 5%
4,500 0%
plant electrcity
plant burner fuel
hot oil heater fuel
equipment fuel
indirect
electricity
TIER 1 - Company Energy Cost (millions)
$1.8 14%
$1.2 9% $2.2 17%
$6.8 52%
$0.25 2%
$0.8 6%
plant fuel
plant electrcity
On-Road Fuel
Off-Road Fleet
Indirect
Car/Light Truck
Once tiered energy metrics and baselines have been defined - management can then assign associated KPI’s and establish targets that will work to satisfy their company energy objectives.
ENERGY MANAGEMENT
Tiered Energy Reporting
Gold Quarry
Process Area Electricity Natural Gas Diesel Gasoline LPG Utility Annual Consumption Total Cost
% of Load % of Load % of Load % of Load % of Load kWh/ccf/gal $
Surface Mining 10 100 Electricity 485,893,146 20,572,566
Leaching Pads 5 Natural Gas 12,682,770 10,286,720
Convey to Stockpile 5 Diesel 17,110,110 27,050,932
Transport to PC/Waste 85 Gasoline 445,871 1,073,029
Primary Crushing 1 LPG 732,413 785,534
Secondary Crushing 1 Total 59,768,781
Bio Ox 1
Sag Mill 6
Ball Mill 18 26
Roasting 24 55
Oxygen Plant 17
Gas Clean-Up 3
Steam Generation
Lime Process/Plant 1
Flotation 5
CIL/CIC Circuit 1
Acid Wash 1
Refinery 1
Tailings Disposal 2
Vehicle Maintenance 1
Dewatering 6
Admin-Lab Facilities 1 100
Personnel Transport
Potable Water Treatment 1
Process Water Treatment 1
Process Effluent Treatment 1
Emergency Generation
AARL/ZADRA 1 13
Assay Lab 1 5
Electricity
34%
Natural
Gas
17%
Diesel
46%
LPG
1%
Gasoline
2%
***Demonstrates Energy Usage and Spend for Each Commodity and Process Area***
Example: Energy Loads and Spend Summary Report
ENERGY MANAGEMENT
QUESTIONS
ENERGY MANAGEMENT
QUESTIONS
UNDERSTANDING YOUR UTILITY BILLS (ELECTRICITY)
1) Utilizing Available Resources from Your Local Utility.
a) Online Account Access.
b) Online Rate and Customer Program Information.
c) Smart Metering and Interval Data Programs.
d) Account Representatives – do you have an assigned utility account rep and have you met them?
Depending on your company or facility size you may not. Some local COOP’s do not have commercial account reps.
What can they offer?
Benefit of a direct contact vs. 1-800 call in number.
Outage assistance and updates.
Information on rebate programs, DSM programs, and rate changes.
Assistance with billing and metering issues.
ELECTRIC UTILITIES
2) Types of Services
Transmission, Primary, or Secondary
http://www.ferc.gov/market-oversight/mkt-electric/overview.asp
3) Rate Structures and Costs Components
Find your rate on your bill or call your Utility.
Look up your tariff or rate summary online.
ELECTRIC UTILITIES
Transmission Customer 115KW – 765KW
, 480V
3) Rate Structures and Costs Components (Continued)
Rate types typically follow the type of service provided (Transmission, Primary, Secondary/Commercial)
A. Utility Rate Cost Components
Delivery Services (Service Fee, Transmission, Distribution)
Demand (KW or KVA)
Billing Demand (Peak, minimum, ratchet, contracted capacity)
Usage (kWh)
Tiered rates (first 50,000kWH, next 200,000kWh, etc.)
Supply (Regulated or Deregulated Market)
Seasonal component (summer / non-summer)
Adjustments (fuel /power cost)
Riders (DSM program costs, optional renewable programs)
Fees and Surcharges (franchise and environmental)
Penalties (late fees, power factor penalties)
Taxes (sales tax, local energy tax )
ELECTRIC UTILITIES
To explain the difference between kWh and KW we can use the common analogy of an odometer and speedometer in a car.
The amount of energy used (kWh) can be compared to cumulative miles driven - represented on the cars odometer.
Energy demand (KW or KVA) can be compared to the speed or rate at which miles are driven at a specific point in time as shown on the speedometer.
ELECTRIC UTILITIES
DEMAND and USAGE
1 KW = 1,000 W
1,000 W = 10 x 100 W light bulbs
1 kWh = 1 KW of demand for 1 hour
1 HP - .746 KW or 746W
ELECTRICITY METERING
Electricity is metered in 15-minute intervals. Peak demand is equal to the highest 15 minute interval during a monthly billing cycle.
Example: If you have a 100 KW load for 15 minutes your demand will be 100KW and your usage will be equal to (100 KW x ¼ hour = 25kWh).
METER MULTIPLIERS
Many utilities place the meter readings on the bill along with the multiplier. The net difference between readings (x) the multiplier will equal the monthly usage (kWh).
ELECTRIC UTILITIES
4) Load Factor – Ratio of average load compared to peak load over a period of time.
L.F. (%) = [(Total kWh)/(# Days in Bill Cycle x 24 hrs/day)]/[Peak kW Demand]
a) 64,000 / (31*24) /650KW = 13.2% (1 shift)
b) 192,000 / (31*24)/650KW = 39.7% (3 shift)
(Examples assume a 400KW average demand)
Low Load Factor = High peak demand low monthly usage
High Load Factor = Low/moderate peak demand and high monthly usage
The longer your operating hours ( 1 shift - 3 shifts) the better your load factor will be.
Under most industrial utility rates, a higher load factor will result in a lower average cost per kWh.
***Short operating months due to weather or maintenance can result in very low load factors and very high costs per kWh. Try and coordinate prolonged shutdowns and starts-ups with meter read dates to improve load factors and decrease costs.***
ELECTRIC UTILITIES
Load Profile / Load Shape (daily, weekly, monthly, annually )
Example: Load Profile of an Aggregate Facility ( 24-hour period)
ELECTRIC UTILITIES
5) Utility Rate Optimization: The comparison and analysis of your
current rate vs. optional rates or optional service levels.
Available Utility Rates - Is there more than one rate available for my facility?
What are your options? (demand, non-demand, time of use, interruptible, low load factor , high load factor, special rates).
Who is responsible for making sure my plant’s meters are on the right rate?
Access your Utility Company’s web site and download your rate summary or the entire tariff.
Studies can be completed in-house, some utilities will perform them for you, or your can enlist the help of an energy consultant.
***Rate class modifications can represent a no cost opportunity to lower your energy costs. Optionally, in some instances capital can be spent to change service levels in order to qualify for a more attractive rate.***
ELECTRIC UTILITIES
6) Power Factor
The relationship between Real Power (KW) and Apparent Power (KVA) is commonly referred to as Power Factor.
• Power Factor is a measure of how efficiently power is consumed and expressed numerically in a range of 0 to 100 percent.
• When utility penalties are present or demand charges are billed in KVA - a low power factor can result in significant penalties!
A Simple Analogy:
The liquid (useful) portion of the beer is represented by KW, while the unwanted (useless) foam is represented by KVAR. The summation of both KVAR and KW is KVA.
EXAMPLE: 750 KW / 1,000 KVA = 75% PF
SQRT(1,000^2 – 750^2) = 661 kVAR to correct to Unity
SQRT(833^2 – 750^2) = 362 kVAR at 90% PF
661kVAr – 362 kVAR = 299 kVAR need to correct to 90%
ELECTRIC UTILITIES
Optionally a Power Factor Table Can Be Used
750KW x .397 = 298 kVAR
ELECTRIC UTILITIES
Power Factor Triangle
ELECTRIC UTILITIES
6) Power Factor – Continued
Power factor penalties are typically charged when PF falls below 90%.
Penalties are charged in several different ways (peak with demand or average with kVARh).
Penalties are often disguised – need to carefully read your tariff.
Corrective Action = Add Capacitors
Where? Depends on primary or secondary service and culprits.
Will my utility correct this issue for me?
Type of capacitors – fixed, automatic, or combination of both?
• Dry or liquid cells, cell de-rating (600V vs. 480V)
• Harmonic amplification (3, 5, 7, 11)
• Cooling and placement
• Controls, Indicators, alarms, and monitoring
Will installing capacitors save me energy (kWh)? NO!
**Beware of fixed capacitor salesmen's who tell you otherwise.**
In Harsh Environments - Better Quality = Longer Life and Better NPV.
***Paybacks on installed systems are typically < 18 months! ***
ELECTRIC UTILITIES
6) Power Factor – Continued
RMEM INSTALLED AUTOMATIC CAPACITOR BANK
(600V de-rated MMP style capacitors, 10 step 1,000 kVAR)
ELECTRIC UTILITIES
7) Demand Response Programs (Demand Side Management)
A. Programs can be offered and administered by your local utility, grid operator, or a third party.
B. Many programs are tiered depending on the size of the load available for shedding and length and type of notice.
C. Many programs pay a monthly base incentive regardless of whether an event occurred or not; additional funding is then paid for each actual event.
D. Some incentives levels (percent shared) can be negotiated with the Vendor.
E. Some programs require a minimum amount of interruption annually.
F. Weigh the cost benefit of participation vs. the estimated downtime and lost production. Identify non-crucial loads to enroll.
G. Know the penalties for running through an event.
ELECTRIC UTILITIES
8) Taxes on Utilities
***Do not assume your Corporate Tax Manager or CFO has addressed these issues.***
State and local taxable status (Exempt / Non-exempt)
Know your applicable tax regulations and statutes. State Department of Revenue (DOR), city , county, townships.
Determine what taxes are actually being charged.
Qualifying a facility or process.
Identifying exempt purchases and recovering refunds.
How often should we be reviewing these charges?
Utilizing energy tax professionals.
Use identified savings and refunds as bottom line savings or reinvest the money to fund efficiency or electrical upgrade projects.
ELECTRIC UTILITIES
9) Renewable Energy Programs
A. Utility Rider Programs (wind or solar rate adders for renewable generation)
B. Onsite Solar or Wind
Feasibility depends on local government and utility programs as well as site specifics.
Most paybacks typically range from 10 to 25 years.
Many Financed and lease arrangements available – be cautious of contract language, terms and warranty, solvency of seller and equipment manufacturer.
C. Community Programs (Solar Farms)
Allow Customers to benefit by buying into a shared solar array without installing equipment on their own property.
Most programs are designed to allow receipt of 30% federal tax credit on to lower buy-in costs.
In some cases these programs offer shorter paybacks than onsite installations.
Customers bill is credited through net metering and customers also receive REC payments.
ELECTRIC UTILITIES
10) Utility Analysis and Auditing
Audit programs should be designed to identify all savings, rebates, and any liabilities associated with:
Actual and estimated meter readings
Adjustments and surcharges
Late fees and other penalties
Incorrect rate categorization
Power factor penalties
Duplicate billings
Metering (measurement and multipliers)
Misapplied payments
Billing of erroneous or closed accounts
Incorrect taxation
What to look for in a Utility Audit
1. Ensure reviewing party has experience in your industry and understands your production processes and equipment.
2. Audit firm will provide initial and ongoing reporting, calculations, and analysis to qualify regulatory or internal requirements.
3. Company will provide your management and staff with the tools and training to identify and manage future opportunities.
ELECTRIC UTILITIES
QUESTIONS
ELECTRIC UTILITIES
QUESTIONS
ELECTRICITY SOURCING IN A DEREGULATED
MARKET
1) US - Regulated and Deregulated Utility Markets
ELECTRICITY SOURCING
ELECTRICITY – North American Transmission Organizations
ELECTRICITY SOURCING
2. Pricing Information and Market Resources
http://www.eia.gov/electricity/monthly/
http://www.eia.gov/totalenergy/data/monthly/
http://www.ferc.gov/market-oversight/mkt-electric/overview.asp
http://www.platts.com/news-feature/2013/electricpower/uspower/index
http://www.platts.com/products/megawatt-daily
Price to Compare
a) Utility companies offer “Standard Offer Service” that is typically adjusted on a quarterly basis (3 months in arrears).
b) Be aware - when moving from a third party supplier to Standard Offer Service (SOS), many utilities require that the customer stay on SOS for 12-month before moving to another 3rd party supplier.
c) Supply pricing from a third-party supplier is typically less than the SOS price. (Not always depending on market movement).
d) Should we move from SOS pricing? Yes!
ELECTRICITY SOURCING
***Competitive electricity supply arrangements can reduce unwanted exposure to market price volatility and allow short-term and long-term budgets to be met.***
3) RFP Process (Selecting the right Supplier and the right contract - at the right time)
a) Supplier, Broker, or Consultant.
b) Direct supplier with generating capacity rather than Broker.
c) Be cautious of high pressure sales reps, research the company!
d) Always solicit three to five bids.
e) Your facility’s load shape and credit are key factors in pricing.
f) Be aware of T & C , full requirements, minimum commitments, auto renewals, pass through charges, transparency.
g) Aggregate your accounts when possible (locally or nationally).
h) Know recent market trends and potential procurement strategies (fixed rates, variable rates, layered block/index, short-term, long-term, etc.).
i) Do not rely on only using contract expiration dates or budget cycles to driving your RFP process. Market movement can present favorable as well as unfavorable purchase opportunities!
j) Larger established Suppliers will be more risk averse with regard to customer credit and financials.
ELECTRICITY SOURCING
4) Different Types of Offerings – see below. Inclusions / exclusions, ancillary charges, covered costs.
Are the solicited offers your are comparing apples to apples - in most cases they are not!
Negotiation. (how much room is there?)
SUPPLY PRICING OPTIONS
PR
ICE
HIG
H
FIXED PRICE
Protected against market pricing variations throughout term.
Locked into executed price for
through term.
LO
W LAYERED BLOCK / INDEX
Designated Percentage of Load Added flexibility compared to 100%
fixed.
FULL INDEX (Market Pricing)
High degree of volatility
Priced at (hourly, daily or monthly)
LOW HIGH
RISK
ELECTRICITY SOURCING
5) Contract Performance and Price Verification.
A. Ensure the necessary tools and processes are available to routinely measure the accuracy and competitiveness of your contracted supply; i.e. (utilization of market indices, price discovery RFP’s, and/or hedging strategies to further establish a competitive advantage).
B. Ensure you are receiving the best VALUE on energy commodities and services within the marketplace. (Where Value represents a consistent supply and service level at a competitive price.)
C. While pricing plays a key role in the majority of energy negotiations; management must also consider the risks associated with interruptions in supply streams, vendors solvency, and service level.
ELECTRICITY SOURCING
Your Commodity Manager or Consultants Should:
Work to identify and obtain the best pricing structure, payment terms, and contract T & C’s .
Known strengths and weaknesses of available suppliers
Assist in selecting suppliers (vendor assessment, RFP submittals).
Provide a market to market comparison between energy suppliers and their proposals.
Review of contract language and participate in negotiations (indemnification, point of sale, specified services, product specification, and pricing formulas, inclusions, renewals, etc.).
Knowledge of Added value opportunities (online reporting, monitoring invoicing, etc.).
ELECTRICITY SOURCING
QUESTIONS
ELECTRICITY SOURCING
QUESTIONS
ENERGY EFFICIENCY
Energy Efficiency - Using less energy to provide the same service.
Energy Conservation - Eliminating or changing a service to reduce energy.
Energy Costs can account for 25 to 35 Percent of manufacturing or mining facilities’ operating costs.
Efficiency improvements can come from conservation and increased equipment and process efficiencies.
A 5 to 15 percent reduction is typically attainable with projects having .5 to 3 year paybacks.
ENERGY EFFICIENCY
1)Utility Incentives and Rebates = FREE MONEY
Study and Project Rebates (25% to 75%)
Talk to your Account Representative.
Visit Utility Web Sites for Program information.
Need Help? Use of Vendors and Consultants to complete process.
2) How to Identifying Feasible Opportunities
Onsite energy audits and engineering studies.
Industry and Company Best Practices.
Already planned upgrade projects may qualify for utility incentives.
Industry Best Practices.
3) Project Focus
Demand or Usage Reduction (Energy Star)
Costs, usage, or both
ENERGY EFFICIENCY
Comprehensive Energy Audits can identify low costs / no costs and capital Energy Conservations Measures (ECM’s) on all or part of your facilities’ equipment and processes.
Specialized Studies:
Lighting
HVAC
Compressed Air
Motors and Drives
Pumps
Advanced Controls
Peak Load Reduction/ Load Shifting
Power Quality/Power Factor
Process Efficiency
Heat Recovery
Fuel Utilization
* ** Many Utilities Offer Incentives for Specialized Engineering Studies ***
ENERGY EFFICIENCY
Sand and Gravel Operation
Sand and Gravel Operation
Audit and Study Deliverables (Usage)
ENERGY EFFICIENCY
(Usage)
Underground mine
Underground mine
Audit and Study Deliverables (Demand)
ENERGY EFFICIENCY
(Usage)
Sand and Gravel Operation
Underground Mine
Audit and Study Deliverables (Costs)
ENERGY EFFICIENCY
ENERGY EFFICIENCY
4) Project / Measure Feasibility – Establish reduction targets and
payback criteria in the beginning.
Prioritize projects by costs level and payback period (from no cost/low cost to capital intense).
Be careful to review all payback estimates for reasonableness ***(hours, load estimates, energy unit costs)***
4) Gaining Project Support and Approval – budgeting and
financing, incentives, implementation, commissioning, post M&V.
In many organizations the approval timeline is longer than the project’s payback!
Assigning responsibilities (internal and external) to ensure ROI.
5) Measurement and Verification – Performance tracking against
initial estimates and previous baseline data.
QUESTIONS
ENERGY EFFICIENCY
DIESEL FUEL
USEFUL FUEL LINKS
EIA WEEKLY PETROLEUM STATUS REPORT
http://www.eia.gov/petroleum/supply/weekly/
EIA SHORT_TERM ENERGY OUTLOOK (MONTHLY)
http://www.eia.gov/forecasts/steo/index.cfm?src=Petroleum-f1
EIA GASOLINE AND DIESEL FUEL UPDATE
http://www.eia.gov/petroleum/gasdiesel
OPIS (Oil Price information service)
http://www.opisnet.com
API (American Petroleum Institute)
http://www.api.org/
OPEC (Organization of Petroleum Exporting Countries)
http://www.opec.org
DIESEL FUEL
How good is your fuel price? 1) Fuel Purchasing Practices
a) Freight rate structure (flat rate, unit charge, minimum load)
b) Method of delivery (bulk, direct fueling, fleet cards).
c) Bulk delivery volumes - adequacy of storage.
d) Owned or leased tanks?
e) Bulk delivery frequency and delivery prompts (telemetry driven, keep full)
f) Fuel types and use (off-road and on-road, mixed/ PTO)
2. Price Competitiveness Within your Market
a) Contracts - Are you operating without a fuel supply agreement?
b) Are you operating on an index plus or minus diff agreement. (OPIS RACK, NY Harbor, Gulf Coast, LA) Do you have access to this data?
c) Are your prices reconciled to the contracted index?
d) Is your pricing consistent – What are your benchmarks and safeguards.
e) Fuel audits and price reconciliation (Internal and External)
.
DIESEL FUEL
3) Risk Management
Implementing an energy risk management program can protect your company from the negative financial and operational impacts of exposure to fluctuating energy markets. Fuel management specialist can help develop sourcing and hedging strategies to reduce price volatility, ensuring internal forecasts, and/or guarantee future supply streams.
A Corporate Fuel Risk Management Program would include:
Determining company goals and objectives.
Defining your company’s risk tolerance.
Establishing current risk baseline for existing supply agreements.
Assigning an internal risk council to advise management and approve contract executions.
Compiling and verify required volume data based on historical and forecasted usage.
Developing a hedge strategy that meets your needs and risk tolerance.
Determining hedge ratios, pricing targets, and internal forecasts.
Ensuring your management team is able to react timely to future market opportunities.
Program performance reporting.
DIESEL FUEL
4) Fuel Taxes - On-road/clear fuel purchases are assessed federal and
state excise taxes as well as county taxes and fees.
• Purchasers of off-road/dyed fuel are typically not responsible for federal or state excise taxes; however are taxed on state, county, and municipal sales taxes and fees. While this represents the majority; some municipal and state governments have managed to assess additional taxes regardless of the type of fuel. Often times these additional “energy taxes” can account for as much if not more than the state or federal excise taxes. We have included and example of two fuel purchases at the same location for different fuels.
DIESEL FUEL
On-Highway Average Cost Breakdown
DIESEL FUEL
US Diesel Taxes By State
DIESEL FUEL
5) Fuel Audits
Review pricing structure, Freight components, payment terms, and contract inclusions.
Provide a market to market comparison within your energy market.
Review of contract language and negotiations (indemnification, point of sale, specified services, product specification, and pricing formulas).
Review of Inventory Storage, Dispensing, Usage Tracking, Security.
Review accuracy and appropriateness of taxes and fees
Billing discrepancies (Duplicate billings overcharges, misapplied payments and credits).
Determine accuracy and efficiency of present reconciliation procedures (billing, consumption, payment, inventory).
Highlight available added value opportunities (online reporting, tank monitoring, invoicing, etc.).
DIESEL FUEL
Fuel Charges – Are you getting what you paid for?
QUESTIONS
DIESEL FUEL QUESTIONS
Erik Fenger, CEM, CEP, CDSM
Rocky Mountain Energy Management
www.maintainenergy.com
800.306-6085 x200 (office)
303.956.0842 (cell)
