You are the energy manager for a food company that operates 5 milk/cheese proces
ID: 1717121 • Letter: Y
Question
You are the energy manager for a food company that operates 5 milk/cheese processing facilities. The owners have asked you to evaluate aggregating the usage of the 5 facilities together and putting out a RFP (Request for Proposals) to energy providers to bid on supplying the power for all 5 of the facilities as a single contract for one year to see if they can lower the electricity cost. Each facility has identical demand patterns as follows (one facility) given the present mode of operation:
Plant Consumption Pattern:
Midnight to 6 a.m. = 300 kW
6 a.m. to 6 p.m. = 500 kW
6 p.m. to Midnight = 200 kW
The Transmission and Distribution Service Provider (TDSP) rate regardless of which Retail Energy Provider (REP), broker or aggregator you use is as follows:
TDSP Transmission &Distribution Monthly Charges:
Customer Charge: $25/month per meter
Monthly Peak Demand Charge: $10.00/ peak kW per month/meter
Energy Charge: (all hours) $0.03/kWh for all energy at all facilities
Power Factor Penalty: None
Remember…you pay your contracted electricity supplier the total of the UDC T&D charges plus the contracted energy/generation charges. The state wants their 6% sales tax of your MONTHLY bill total (TDSP + Supplier).
Bids from competitive REP’s are received and there are several viable options available including a new proposal from your current supplier “Safe & Easy Company”.
• Option 1 (Current Supplier): Safe & Easy Company This company offers the energy/generation portion of the bill at a fixed price for one year of $0.08/kWh (all hours). They will take care of arranging your supply, aggregating the bills and sending you a bill each month. You pay them and they pay all the other suppliers. You like the fact that the $0.08 is easy to remember but you notice in the contract you must pay for a minimum 250,000 kWh every month even if you don’t use that much.
• Option 2: Traders R Us This company offers the energy/generation portion of the bill at a cost based on the futures market forward price curve plus a 15% premium/transaction charge. Here’s how it works, each month, the price you pay for energy will be based on the present futures price plus 15% of that amount. Traders R Us will also collect and pay the local TDSP T&D charges which will be listed as a straight pass through on the bill.
Current Energy Futures Prices (Today)
Month $/MWh
January 22.00
February 24.00
March 32.00
April 35.00
May 45.00
June 65.00
July 85.00
August 98.00
September 88.00
October 68.00
November 48.00
December 32.00
• Option 3: EcoMind This company offers the generation/energy portion of your bill in incentive form with an on-peak and off-peak energy rate to promote conservation. They also guarantee the all energy you are consuming will be “renewable energy” meeting the definitions and requirements in the states your milk/cheese plants are located in. Similar to the others, they arrange your supply, collect the bill and pay any other suppliers like the TDSP the pass through charges. Their energy structure is as follows:
Off-peak hours (10 p.m.-10 a.m.) $0.02/kWh
Peak hours (10 a.m. – 10 p.m.) $0.20/kWh
A. What are the disadvantages of the EcoMind proposal?
B. Which of the three options would you choose and why?
Explanation / Answer
B. Option 3 i will choose
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