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Fuels Management

Have your fuel procurement costs evolved to meet the challenges of a more efficient, market driven price?

Does your organization possess the skills to manage future partnerships and energy service opportunities?

Has your company developed a strategy to maximize value by evaluating risk management techniques?

 

Vantage Consulting, Inc. introduces an evaluative management method which will identify and quantify opportunities resulting in significant cost reductions and value to your Company’s fuel procurement practices.

Fuel management plays a much greater role at utilities as competition begins to take place within the industry. The management at many utilities took a position of maintaining reasonably low fuel costs, while emphasizing security of supply and minimizing disruptions. Electric utilities are now faced with the task of reinventing themselves to deal with inevitable, accelerating change.

Fuel adjustment clauses will be replaced with alternate ratemaking mechanisms such as rate caps, performance-based ratemaking, or market-based rates. Fuel costs will be re-evaluated beyond the traditional supplier purchase price to include the fuel quality operation and maintenance expense. Fuel management will not only be driven by fuel cost, but the value to the utility provided through energy service integration and mutually beneficial alliances. Fuel departments will be required to interface more effectively with their customers and remain flexible in their strategies. Skill levels must evolve to meet these challenges. There will be a paradigm shift which will reap benefits to those utilities willing to seize those opportunities thought to be inconceivable in the past.

The key features of this product which provide an optimized strategy and advantages for the utility would include:

Procurement process reengineered toward the future.

Strategy developed based on core competencies.

Performance improvement areas are targeted.

Measures are balanced for risk versus opportunities.

Corporate salary incentives can be integrated into performance goals.

 

Product benefits and quantifiable savings between one and five percent of total fuel costs can be accrued in a number ways through the Vantage team evaluation approach.

Mutually beneficial alliances reviewed.

Performance benchmarks developed consistent with utility mission.

Risk analysis opportunities defined for fuel management.

Incremental improvements are documented over time and against other units.

Skill sets evaluated based on core competencies.

 

The Vantage Implementation Approach seeks to optimize each area in the fuel procurement process by working directly with the generating stations, fuel procurement, and strategic planning departments. An initial overview analysis to assess the process will include the following:

Review the organizational structure and policies and procedures of the fuel procurement department.

Review all current contracts for price escalation’s, contract amendments, and quality payment/penalty options.

Determine whether the utility obtains current strategic information which is valuable to their procurement process.

Evaluate the utility’s use of models to optimize fuel procurement.

Assess the utility’s success in forecasting loads and achieving procurement opportunities.

Review performance monitoring programs currently in place.

Determine the "total" evaluated operating fuel expenses for each unit/station.

Integrate performance measures which enhance fuel department interaction with the strategic planning process.

Develop stretch targets which add definable economic benefits to fuel procurement.

Evaluate efforts to lower transportation related fuel costs.

Visit a selected number of power plants and review all aspects of fuel utilization, including the following:

- Type of fuel required

- Methods for delivery and storage

- Sampling and measurement methods

- Inventory and accounting methods

- Coal pile survey methods, results and adjustments

For each power plant coal storage location, determine:

- Total storage capacity

- Inventory at hand each month in volume and cost

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