Situation

IT Company Turns to BAI in Deregulated Power Market

An IT company had acquired its first major facility in a deregulated power market and was searching for assistance with navigating the complexities of competitive power supply. The company was referred to us by a firm that has engaged with us for work in another part of the country. As it turns out, we had already assisted numerous clients with sourcing arrangements in that market, and had been involved in the regulatory proceedings that initially established the market rules.

Approach

As the facility was ramping up, we assisted with identifying the appropriate tariff and supply contracts that would provide the lowest cost, while at the same time meeting the company's desire for budgetary certainty. At first, this meant taking default service from the distribution company under a standard tariff. As the load increased and certain demand thresholds were exceeded, we moved the load to a competitive supply contract in order to minimize certain ancillary supply costs. Once at full capacity, we assisted with the transition from retail supply to becoming a pseudo wholesale market participant. Over the course of a few years, we had recommended three distinct sourcing arrangements (default supply, retail, and pseudo wholesale) that were dictated both by changes in the load, and also by market conditions at the time, and a deep understanding of market rules and regulations.

Results

We have negotiated supply arrangements that result in more flexibility, transparency and a lower cost to the company. The company has since engaged us to develop a corporate energy policy that addresses issues such as cost stability and long-term competitiveness, the critical need for reliability along certain points of the company's supply chain, and the desire for securing more supply from renewable resources. We have become a critical component of the company's energy team and has continued to drive savings and efficiencies across the company's portfolio.

Situation

BAI Helps Illinois Industrial Energy Consumers save over $10 Million
We provide expert testimony in utility rate cases across the U.S and part of Canada. In Illinois Commerce Commission, Docket 09-0306, et al, Ameren Illinois proposed new rates that would have raised some individual industrial customers' delivery costs by over 1000 percent. These exorbitant increases were the result of a combination of factors, including overall revenues requested and a major reallocation of costs to the industrial customers' rates.

Approach

We assisted the industrial intervenor group (Illinois Industrial Energy Consumers, or IIEC) in opposing these rates through expert testimony on: (1) utility revenue requirements, including return on equity; (2) class cost of service, including allocation disputes; (3) revenue allocation, including a reasonable rate moderation plan; and (4) rate design, including a proposal for combined billing of multiple meters. We also assisted in developing discovery, and in other litigation steps.

Results

Our experts developed and successfully defended solid testimony in the case. In its final order, the Illinois Commerce Commission acknowledged our positions on several issues and adopted many of them. As a result of the IIEC's successful intervention, the final approved rates were much more reasonable, and increased the intervention group's average costs by less than 7 percent, rather than the Ameren proposed average increase to the group of nearly 120 percent. This reduction from proposed rates represents a savings of over $10 million per year for the overall client group.