Supply-side Strategy Implications on Demand-side Opportunities

Abstract

Major changes in the gas and electric markets have created arange of risk management products to support supply-side planning.The supply-side goal is usually to balance a client’s tolerance for costfluctuations with the lowest possible price. There are many implicationsa supply strategy has on demand-side opportunities. They should beconsidered carefully. This integration of supply and demand-side plan-ning often does not take place because they have been thought of as twoindependent disciplines. They require two separate sets of expertise.Historically, demand-side planning has been a responsibility forengineering and operations while supply-side planning was the domainof purchasing and procurement. The integration of supply and demandis critical to control of your total energy picture. The right hand needsto know what the left hand is doing. There are a number of situationsthat illustrate where an integrated supply and demand-side approach isvitally important.This article will examine two situations as examples. We will showhow your supply-side strategy affects your true energy costs and howthat is different than in the past. We will also show how a supply-sidestrategy gives new triggers for demand-side actions.