Reducing Budgets and Managing Energy

Transparent Energy engaged Ironstate Development’s portfolio of properties in late 2016. Working closely with CFO Chris Zirrith, we executed 20 supply agreements together for electricity and natural gas for multiple locations and over 40 unique meters.

Prior to engaging Transparent, Ironstate had been using a traditional broker to procure their energy. They were receiving bids upon request only. Our approach of using our proprietary auction software to satisfy their buying needs across multiple properties was exactly what they needed.

We faced a few unique challenges when engaging Ironstate – including limited lead times to enroll multiple Legal Entities across different portfolios and lining up various existing contract end dates. The next section will go into detail to describe how we faced each of these challenges.

When we first engaged Ironstate, their existing contracts were expiring in a few weeks. This was not enough lead time for our full process – which includes a deep dive analysis, an initial bid round to create benchmark pricing, a pre-auction call to review procurement strategy, and finally a live auction that the customer views with a Transparent Energy employee. Instead of rushing through our process, we extended Ironstate’s existing contracts one month further. During this month, we went to work.

Our first task was to understand their procurement needs on a portfolio wide basis. With multiple properties under several different Legal Entity Names (LENs), we had to better understand the corporate structure of the client. After a few consultations, we discovered how they wanted to procure power and which managers had signing authority for each specific property. The bulk of the residential locations in the Hoboken area were aggregated as one auction, each hotel had to be auctioned separately and the Staten Island facility needed a separate auction as well.

Our next step was to understand the risk tolerance for Ironstate. Upper management preferred budget certainty over index priced contracts. Thus, we moved forward with Fixed pricing for the electricity

Since then, we have consistently renewed Ironstate’s contract well ahead of contract expiration when markets conditions meet their risk management goals & objectives.