Energy procurement

The unit is currently responsible for and has executive delegation on behalf of participating campuses to negotiate and procure electricity as a commodity. Electricity is purchased from a third party provider with an annual contract value of approximately $18,000,000. The unit works through selected Energy Service Providers (ESPs) within the energy wholesale market and remains fully informed of pricing and negotiates commodity contracts accordingly.  Electricity is delivered by three serving investor owned utilities whose rate schedules, and changes therein, are constantly monitored to prevent erroneous charges. With a total UC system purchased electricity bill of over $122,000,000 per year (exclusive of cogenerated electricity) the unit, with the assistance of purchased utility data base, can minimize billing errors and direct the utilities to take corrective action as needed.

Moving forward, while natural gas is currently supplied under contracts that are directly negotiated by the campuses, the university is exploring replacing the traditional source wholly or partially with biogas, primarily because of new regulations on emission and achieving the initiatives identified by the Climate Solutions Working Group. At the request of the campuses, the unit has developed a strategy for securing adequate sources from an emerging biogas market and is currently pursuing in-state and out-of-state supply options.

In order to achieve carbon neutrality per the Sustainable Practices policy, the university will need to significantly increase the mix of renewable energy in its overall electricity procurement portfolio. As traditional suppliers, such as the utilities, are statutorily limiting their renewable energy mix to 33% by 2020, the university needs to exceed that percentage. To accomplish that objective, the unit has developed a strategy to directly participate in the wholesale electricity market that will enable the university to purchase and arrange for delivery of large volumes of such energy.  The university intends to modify the current model by engaging with a public power agent that can assist the university with procurement strategies and manage the day-to-day energy transactions as well as supply reconciliations with the grid operator.