Category: Energy Strategy
New Zealand’s most iconic sporting facility is a big energy consumer, with catering companies and sports associations among the tenants it serves. And that’s before you even factor in the cost of switching on those massive floodlights.
Working with Energy Select (the procurement brand operating under the Smart Power umbrella), Eden Park Trust was able to restructure its electricity and gas contracts to control costs during a time of steeply rising energy prices. Here’s how.
Urgency plus complexity equals risk.
Eden Park Trust was already working with Smart Power to manage tenant billing. In late 2019, the Trust received notification from its energy supplier that the contract was due to renew. A new schedule of charges was attached.
The problem from the Trust’s point of view was that it was impossible to tell whether the deal was a good one. With a decision imminent, CFO Brett Winstanley asked us to take a closer look.
“Energy Select recommended a review of all the different types of contracts we had, to get a holistic view,” Brett says. “As well as separate gas and energy bills, we have contracts for Time Of Use (TOU) and Non Half Hour (NHH) connections. It’s a bit complicated, and that was the problem.”
We suggested putting all the contracts out for tender rather than simply rolling over the current arrangements. This made the business more attractive to energy suppliers. Energy Select managed the process and handled negotiations – but that was only half the job.
Competition and complication.
The Trust received 12 proposals from energy providers, each one offering a different combination of terms, rates, prices and options. In other words, it was impossible to compare apples with apples. Expert analysis was required.
“We got Energy Select to distil all the proposals into a report our team could use to make a decision,” says Brett Winstanley. “It’s an extremely complicated market, and companies need expert guidance to avoid expensive mistakes. We needed to understand what was going on in the market and which contracts would work best for all parts of our business.
“It was about translating all the data and relating it to a complex environment, so we could make the most informed decision.”
A win for Eden Park.
The comprehensive report we created enabled Eden Park Trust to confidently select three new energy suppliers.
One goal of the exercise was to ensure the Trust obtained the best terms for its electricity and gas connections, so it wouldn’t be blindsided if market conditions changed one or two years down the track. As Brett Winstanley says, price is only part of the story. You need to know whether you’ll be stuck with an unsuitable arrangement because of a lack of understanding when the contract was signed.
“We got an outcome that suited our circumstances and a deal we were comfortable with,” he says. “It gives you confidence to know that you’re dealing with people who understand why prices are where they are – and can explain the market forces driving them.”
As you know, measurement enables management. So if you want to start decarbonising your operations, the first step is to set up reports.
Smart Power has the emission factors as published by the Ministry of the Environment or Australian NGERS equivalent loaded into our system. So any utility recorded by us automatically has its greenhouse gas emission calculated.
For most clients, this will be electricity, gas and LPG on a monthly basis. Other utilities can also be loaded, such as petrol, flights, taxis, coal, wood, waste water, refrigerants. Some clients give us these annually and these are input so reports can be provided. Other utilities can be input monthly as well, depending on how regularly the client wishes to monitor total emissions.
As a Smart Power client, you can select which emission factors to use. This is most relevant for electricity, which changes considerably in New Zealand due to the amount of rain feeding into hydro lakes.
The MFE factors are often published several years behind. Thus for accuracy some clients prefer a quarterly factor.
The second area where Smart Power can assist is reporting the emissions on the basis of the MFE voluntary guidelines for business. These guidelines are based on ISO 140641.
This is more a more complex exercise as it requires the organisational boundaries to be agreed. A base year must be established with systems ensuring the accurate collection and accounting for all the emissions. A detailed report can then be provided with breakdowns of the emissions.
The key to success here is to improve the collection process so that the following year it is a much simpler piece of work.
Smart Power has two staff members who have been trained in assisting organisations to do this. Please contact us if you would like to know more.