To manage energy volatility and secure a reliable supply, campuses should assess risk through a strategic energy review, build a data-driven energy management plan with price alerts and sourcing options, and optimize procurement using competitive contracting and disciplined market timing.
Introduction
Energy teams across North America are navigating one of the most unpredictable periods in modern energy history. Prices swing rapidly, seasonal demand peaks are sharper, and aging infrastructure continues to strain reliability. For energy procurement managers, facilities directors, and CFOs, the challenge is no longer just “buying energy” - it’s understanding risk and managing it with precision.
This blog offers a practical and story-driven guide to energy procurement and energy risk management, built around three foundational steps. You’ll learn how to analyze your exposure, create a strategic energy plan, and implement procurement tactics that reduce volatility and strengthen supply security. By the end, you’ll be equipped with an actionable framework to answer essential questions like “How do I manage energy volatility?” and “How can I establish a secure energy supply?"
Step 1: Understand the energy challenge
Why it matters
A large Midwestern university recently saw an unexpected winter cold front spike natural gas prices nearly overnight. The result? A budget that overshot projections by hundreds of thousands of dollars - not due to lack of effort, but lack of clarity about risk. Their exposure wasn’t mapped to real operational dynamics.
Campuses nationwide face similar risks. Rising energy costs, shifting market conditions, and aging assets can disrupt academic and operational continuity. Without a clear understanding of where and why costs rise, even the best teams can be blindsided.
Action: Conduct a comprehensive energy strategy review
Start by examining:
- Load profiles across seasons and building types
- Contract structures (fixed, index, block-and-index)
- Demand charges during events, holidays, move-in periods, or extreme weather
- Unhedged portions of your portfolio
- Operational inefficiencies tied to scheduling or asset performance
Create a risk register organized by:
- Market risk
- Regulatory risk
- Supplier risk
- Operational risk
This becomes the foundation for all decision-making and ensures finance, facilities, and leadership teams operate from a shared reality.
Step 2: Build a strategic energy plan
Planning over predicting
On the East Coast, a multicampus system once tried to “time the market.” They waited for a dip that never came. The next year, they shifted to a structured risk management plan with predetermined alerts. Instead of trying to guess market bottoms, they layered hedges when conditions aligned with their strategy. Over 12 months, they delivered cost stability and avoided unnecessary risk.
Why it matters
A formal strategy ensures every procurement decision aligns with operational needs, financial limits, and academic goals. It transforms energy procurement from reactive to proactive- reducing emotion, guesswork, and budget risk.
Action: Build a risk-mitigated and market-aligned plan
Your plan should include:
- Defined hedge posture (e.g., maintain 60–80% fixed rate coverage)
- Price alerts for layering blocks when favorable
- Forward market tracking linked to approval processes
- Sourcing flexibility (block-and-index, RFPs, pass-through contracts, PPAs)
- Contract guardrails
o Bandwidth/swing tolerances
o Congestion/basis definitions
o Change in the law protection - Resilience strategies
o Onsite generation
o Demand response programs
o Backup fuel planning
A concise Energy Strategy Charter (one page) helps stakeholders understand goals, risk limits, procurement tools, and decision cadence.
Step 3: Optimize procurement for maximum impact
Small timing changes, big budget outcomes
One campus saved millions simply by tightening its purchasing process - using pre‑approved price bands, monitoring the market daily, and acting early ahead of a predicted winter price surge. What looked like perfect timing wasn’t luck at all. It was the result of a structured procurement framework, disciplined execution, and ongoing commercial oversight that allowed them to move confidently long before competitors reacted.
Why it matters
When you combine strong governance with real‑time insight, even small adjustments in buying windows can shift financial outcomes dramatically. Procurement success comes from the combination of:
- Market intelligence
- Clear decision rules
- Competitive supplier pressure
- Consistent optimization
Individually, each of these adds value. Together, they create a resilient, repeatable system that protects budgets, unlocks savings, and gives energy buyers the confidence to act decisively when opportunities appear.
Action: Use data-driven procurement
Focus on:
- Layered executions: Avoid all-in buying and use staged hedging to smooth volatility.
- Competitive RFPs: Compare suppliers transparently on adders, credit terms, losses, and basis.
- Stronger contracts: Ensure bandwidth, price components, and index definitions are clear.
- Quarterly optimization: Re-evaluate hedge coverage, load changes, and market shifts.
- Cross-functional communication: Provide CFO-ready summaries on budget variance and next steps.
Ready to take control of your energy strategy? Start with an expert consultation.
Energy Procurement for campus leaders
FAQs
How do I manage energy volatility?
Use layered hedging with price alerts, maintain some index flexibility, and review load and forward curves quarterly.
How can I secure a reliable energy supply?
Combine resilient supplier contracts with onsite generation, demand response programs, and multiple sourcing options.
What is the best fixed vs. index mix?
Many campuses target 60–80% fixed rate coverage while keeping the remainder flexible to capture market dips. However, this should be assessed on a campus-by-campus basis.
Where should I start?
Begin with an energy strategy review and risk register, followed by a one-page Energy Strategy Charter.
How can I improve price transparency in my energy procurement?
Increase visibility by requesting fully itemized supplier quotes, separating energy, capacity, transmission, and non‑commodity costs. Use independent market benchmarks and price‑to-market reporting to verify competitiveness. Regularly review contract pass‑through clauses so you understand which charges are fixed, which are variable, and how they may change over time.
