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Commercial energy procurement 101 for facility managers

Commercial

Demand vs energy charges, load factor, capacity tags, RFP timing. The full primer for facility managers writing their first commercial energy contract.

Harry Parker

Energy Consultant, Seenra Inc

Commercial11 min readPublished

Featured infographic

Commercial energy procurement: the 4 pillars

Load profile + demand charges + capacity tags + RFP timing. Master all four to ship a clean lock.

Open graph image · /og/rfp-funnel.png

Commercial energy procurement is the discipline of buying electricity and natural gas on competitive markets, structured to insulate operating budgets from wholesale volatility. The four pillars are: understanding load profile, demand charges, capacity tags, and RFP timing. The right RFP runs 5 to 9 suppliers in parallel and locks 18 to 36 months at the August through October window. Typical commercial savings on a clean lock vs utility default: 12 to 22 percent on the supply portion.

Pillar 1: understand your load profile

Pull 12 months of hourly interval data from your utility (most ISO-affiliated utilities publish this on request for commercial accounts). Calculate average kW, peak kW, kWh per month, and load factor.

Suppliers price differently for flat profiles vs spiky ones. Knowing your load factor before requesting offers helps you score the responses appropriately.

Pillar 4: run the RFP at the right time

The August through October window prices most aggressively across PJM, ERCOT, and ISO-NE because PJM capacity auction has cleared and winter spike risk has not yet priced in.

Invite 5 to 9 PUC-licensed suppliers. Provide standardized RFP package (load profile, contract term, terms required). Score offers on all-in price + contract clauses + commission disclosure together.

Lock the rate before the next reset.

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Common questions

Quick answers from the editorial desk

When should I start the RFP?
Start 90 to 120 days before your current contract expires or before the August through October lock window opens. Allow 30 to 60 days for supplier responses and scoring.
How many suppliers should I invite?
5 to 9. Fewer than 5 reduces price competition. More than 9 increases scoring overhead without materially better pricing.
What contract length is right for commercial?
24 months is the sweet spot. Captures two winter cycles inside a single contract. Larger accounts sometimes go 36 months for additional stability.
Who pays demand charges?
All commercial customers. Demand charges are based on your peak 15-minute kW draw during the utility peak window. They are separate from energy (kWh) charges.

Further reading

Pillar guide, cluster siblings, and state pages cited above

Sources

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