Why buy Natural Gas with CPA Co-op?
As we witness the volatility in the gas markets from the events in Texas and the pain caused by broken systems, CPA will press on with our first gas purchase in Illinois. We are partnered with local affiliates of the Industrial Areas Foundation as we work to negotiate better contracts and also to build the relational power needed for systemic change.
Community institutions need not worry about dramatic swings in natural gas pricing if they partner with CPA Co-op. Last Fall 55 community organizations in DC, Maryland, and Virginia joined CPA in collectively purchasing natural gas. With our groups collective purchasing power and CPA staff expertise, we negotiated contract terms that continue to protect our purchasing group from market volatility.
Our negotiated contracts lock in a fixed price that will not change due to weather volatility or dramatic shifts in usage. Additionally: 100% swing clauses in CPA contracts are especially important for community institutions during COVID, as energy usage in buildings has reduced dramatically due to lockdowns and social distancing.
February's winter storms have led to volatility in the futures market for natural gas.
Our Most Successful Program
CPA’s energy program is CPA’s longest running and most successful program. We’ve completed over 10 group electricity purchases and a handful of group gas purchases, and the experience of our members and their peers deeply influences our approach. We’ve spent the better part of the past two years refining our purchasing approach. Here’s the core of our strategy:
Aggregation Group Process: We have a proven approach to facilitate many similar organizations working to purchase electricity together. This allows us to:
Increase purchasing power: By bringing a large group together to purchase, we’re able to push suppliers on their margins, and offer greater protection to our members if and when issues arise.
Reduce transaction costs: By working together on the same process and timeline, we can significantly reduce the transaction costs for suppliers, resulting in more aggressive rates. Suppliers treat the group more like a large commercial customer (e.g. a university) rather than a disparate set of individual organizations.
Live bid: Since energy pricing is constantly changing, by committing to sign together on Bid Day, suppliers are able to submit their most aggressive rates possible.
Supplier Relationships: We believe a big part of reliability is truly knowing the suppliers. There are dozens and dozens of suppliers licensed to provide a gas supply contract; we work with a small handful we can trust:
Business model alignment: We work to really know the suppliers - their leadership, their internal systems, their business positioning. How do they add value, what’s their approach to price reliability, and how do they make a profit? In order for CPA to recommend a supplier we need to know they are aligned around our principles of transparency, reliability, and cost competitiveness.
Relationships with key leadership: We put in the time to build relationships with management and executives at each supplier. This helps us get to know the company better and also to have an immediate connection with someone that has the power to help our members. Whether that’s to amend a contract provision, help push pricing lower, or to resolve any issues that arise during the contract. When you contact CPA about your contract, we have a connection to someone at the supplier that can resolve the issue and knows there are hundreds of organizations
Why Buy Natural Gas Together?
By banding together, we aim to achieve two goals: (1) reliability and (2) savings.
Reliability. Natural gas prices on the utility fluctuate radically between months. When looking at prices over the last couple of years, we see prices jumping from the mid-$0.30 per therm to the mid-$0.60 per therm.
The fluctuations in price make it difficult to budget even when usage can be predicted. The fluctuations also make the price especially susceptible to large jumps from freak events, such as the polar vortex of 2014/2015. Locking in a price through a third-party offers protection and budget certainty.
Savings. By leveraging our group purchasing power and performing a competitive bid, we can drive down margins and secure a better rate for our community organizations. By saving money on facility costs, our organizations can dedicate more of their limited resources to their core activities.