Client
Restaurant operator with 40 sit-down dining locations.
Challenge
With increasing electricity and natural gas costs, our client sought to validate the rates their existing energy broker had procured.
After assessing their accounts and contracts, Cost Control Associates’ (CCA) Energy Procurement Team found significant opportunities for better pricing. We worked directly with the CFO, identifying several major gaps in their energy portfolio and three primary ways their energy broker was letting them down.
- 1. Contracts for many locations expired and converted to month-to-month, leaving them at the mercy of volatile energy marketplace pricing.
- 2. Unexpired contracts contained punitive language and contractual pitfalls that allowed incumbent carriers to assess large fees if they didn’t meet certain usage thresholds.
- 3. Contracts were to end in January, a historically bad time to negotiate pricing.
In addition, based on our industry benchmarks and understanding of marketplace trends, the client had not achieved best-in-class pricing, leaving room for CCA to negotiate improved rates.
Solution
After identifying several gaps in their buying plan, CCA took over management of their entire portfolio to our team.
CCA performed a deeper analysis of their invoices and agreements, connected with stakeholders from accounting and finance, and engaged four suppliers via RFP for both electricity and natural gas pricing.
Once CCA received pricing from each supplier, we modeled the financial impact of each supplier’s proposal based on historical volumes and presented our analysis and recommendations to their team.
Results
The client accepted CCA’s recommendation for fixed, all-in pricing with a single supplier for natural gas, and multiple suppliers for electricity, with 36-month agreements to lock in best-in-class pricing long-term.
Six agreements worth $700,000 in savings over a three-year period:
- Electricity savings range from 8% to 26% across five utility companies, totaling $97,342 in projected annual savings or $292,000 in savings over three years.
- Natural gas savings range from 15% to 41% across four utility companies, totaling $134,379 in projected annual savings or $403,000 in savings over three years.
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