Questions to Ask Before Undertaking
Energy Procurement
NJSEM Members may freely participate in our procurements and are only bound by the results if they DO NOT opt out before the end of the opt out period. As a NJSEM member, you not only receive all the administrative work performed on your behalf as a part of your membership, but all the important issues inherent to a public procurement have been weighed and addresses for you by our team of experienced industry experts. If you are a member or considering becoming a member here are some questions to ask before proceeding with a procurement on your own.
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Is our supply going to be competitively bid?
Remember, under NJ State Law public entities must hold an open, competitive bid following the NJ DCA's rules and regulations. If your procurement does not follow these guidelines you may be subject to penalties and your agreements void.
How is your price structured? Fixed price versus variable pricing
In most cases, you'll want to request a price that will not change during the contracted period. Problems inherent to variable price contracts include the ability to audit how much and on what basis the pricing changed and of course, how to ensure that pricing is proving the savings you anticipated at the execution of an agreement. A contract may have certain well defined "pass-through" elements that have a basis in true market costs and by allowing these may actually yield more aggressive market prices. However, broadly defined variable pricing leaves the customer no safe-guards or any guarantee of actual cost reduction.
Are you experienced in energy procurement?
Your town / municipal authority may have extensive experience in procurement but the energy industry is both complex and in constant flux. Understanding which energy products to choose, agreement durations and bid evaluation are all complex issues that may be untenable for some towns. Hiring consultants to manage these issues for you is a possible solution but these services are typically very costly. It can be even more costly to make the wrong decisions about these terms and conditions. It's important to note that our well vetted experts are industry veterans and their services are included in your NJSEM membership.
Does your municipality have specific knowledge of Public Bidding Laws as they pertain to energy?
Your municipality may purchase any number of goods and services on a regular basis. Energy products, however, receive special handling under DCA regulations. There are certain protections that are necessary for other products that are not only unnecessary for energy products, but if handled in a traditional means as with other types of goods and services, can end up costing your municipality more. At the same time, other protections are recommended exclusively for energy products. Procedures, bidding periods, electronic measures and processing all are unique to energy products in modern procurement proceedings. To ensure that your procurement conforms to the latest laws and regulations, and that it is structured such that it provides all necessary protections while yielding the best possible results, we recommend retaining expert assistance in your energy procurement initiatives, like those engaged by the NJSEM.