In October 2013, Loyola University of Chicago (LUC) retained Prospect Resources, Inc. (PRI) to manage its energy procurement. PRI was able to help the University save thousands on their energy bills in a very short amount of time. In April 2014, natural gas supplies started flowing under the PRI strategy, and electricity followed in 2015.
Some of the ways that PRI was able to help LUC include developing appropriate procurement strategies, issuing RFPs, and assisting in the selection of energy suppliers. PRI also helped LUC meet its initial Green energy metrics. All in all, this has created significant savings for the University!
PRI restructured the gas supply agreements from a fixed volume, fully hedged product to a partially hedged product with a managed storage component. This has mitigated the risks of monthly market true-up transactions which cost LUC approximately $360,000 in FY2012. A market true-up is the adjustment of an energy contract to reflect the market price of energy at the time the contract is executed. This adjustment can be either positive or negative and can happen at any point during the contract. They can have a negative impact on your bottom line if you don’t hedge your risk. There have been no market true-ups since.
Using its network of key industry connections, PRI was able to bring ComEd’s upper management into play and helped resolve many outstanding and recurring billing issues. In addition to reorganizing the accounts, PRI facilitated the removal of tens of thousands of dollars in penalties and late fees.
Fee Optimization, Audit, and Layered Hedging
As a second step in organizing the utility accounts, PRI facilitated the consolidation of over 200 ComEd accounts, reducing the bookkeeping work and saving LUC upwards of $40,000 annually in service fees to ComEd, under the premise that fewer accounts mean less maintenance and account support fees.
PRI audited electricity charges on a series of invoices from a previous supplier. After comparing the original contract and further auditing other bills, PRI discovered that LUC had been overbilled by approximately $700,000, and the University was able to reclaim those funds without dispute.
PRI facilitated contracts that allowed LUC to purchase Renewable Energy Credits (RECs) for various percentages of its electricity procurement over the past several years. This expanded to 100% usage for the 2021-2022 Academic Year.
Utilizing its hedging strategies, PRI has generated electricity savings of over $753,000 (Jan 2016 – Dec 2020) and natural gas savings of over $779,000 (Apr 2016 – Mar 2021) on its primary campuses compared to utilizing typically fixed price strategies.
PRI created new load and delivery profiles for the Health Sciences campus pursuant to the investment in the Central Steam Plant. Annual gas savings were over 102,000 therms.
PRI assisted in altering natural gas delivery to buildings where occupancy fell drastically during the Covid-19 pandemic (i.e., Residence Halls). Using altered injection/withdrawal profiles and creative monthly nominations, the University had gas where it needed it (i.e., Research buildings). It did not need to sell any gas back at month’s end.
Energy procurement is a complex and essential process, and organizations must carefully identify and contract with suppliers. This process must be conducted carefully, as it can significantly impact an organization’s bottom line through cost savings and risk management.
Prospect Resources, Inc. (PRI) has extensive experience with both energy purchasing and risk management strategies. As depicted in this case study, PRI helped Loyola University of Chicago (LUC) save thousands on its energy bills by revamping its procurement strategies and advocating on its behalf with its suppliers. Our consulting ultimately enabled LUC to meet its initial Green Energy metrics goals and lower its energy expenditure dramatically.
LUC is just one example of PRI’s success stories. We have helped many organizations save money on their energy bills and reduce their carbon footprint. To learn more about our work, see our other case studies.