November 2023 Volume 5

ENERGY

When FIA member Alcorta Forging Group (Alcorta), a leading international forging operation with headquarters in Spain, made its first U.S. acquisition, it got a quick lesson in the quirks and complexities of U.S. power markets. But thanks to an introduction by James Warren, President and CEO of the FIA, and the handiwork of FIA power procurement partner Transparent Energy, the forger found its way to a better contract – not once, but twice – netting over $280,000 in annual savings. Forging Case Study: Alcorta and the Power of Competitive Electricity Procurement By Nancy Gardner

A Rude Welcome to U.S. Energy Markets In 2022, Alcorta made its first U.S. acquisition, purchasing a forging manufacturing operation in Michigan. Unbeknownst to the global forger, the company it had acquired was in an electricity contract that was about to expire, which led to several months of paying a “holdover” rate once the original contract ran out. That holdover rate was quite expensive and weighed on the company’s bottom line. Alerted of this vexing situation by Ruben de la Pena, Alcorta’s Corporate Development Officer, James Warren, FIA President and CEO, suggested a simple fix: contact Transparent Energy, a trusted FIA partner who had successfully saved FIA members hundreds of thousands of dollars while reducing energy-cost risk through its competitive procurement process. An introductory meeting was made; Transparent Energy impressed with its knowledge of the local power market and its competitive procurement process; and a new partnership was born! Wielding Competition to Reduce Energy Prices Because of peculiarities in the Michigan power market, only two energy suppliers could price Alcorta’s electricity load. But whereas some would see a market of two as one of “paucity,” Transparent Energy saw it correctly for what it was: an opportunity for Alcorta to get a better deal . With Transparent Energy on its side, Alcorta re-approached the incumbent supplier about its current rate. When informed of the forger’s interest in having Transparent Energy run a competitive procurement on its behalf, the incumbent supplier immediately offered a better rate. As a result, Alcorta signed a new 12-month agreement with the supplier at a full $0.02/kWh less than the holdover rate – a savings of over $120,000! But the story gets even better. Because Transparent Energy closely monitors energy markets on behalf of its clients, it is able to find opportune times in the market to get customers into even better contracts. Finding just such an opportunity in April 2023, a full seven months before

contract expiration, Transparent Energy approached Alcorta with a compelling renewal offer. As a result, Alcorta renewed with the incumbent supplier for an additional year – at a lower rate that will deliver an additional $160,000 in savings in 2024. “Power is a major operating expense both across the forging industry and for us at Alcorta,” said Ruben de la Pena, Corporate Development Officer, Alcorta Forging Group. “Through the help of the Forging Industry Association and Transparent Energy, we were able to turn the competitive dynamics of the U.S. energy market to our advantage to net significant initial savings. We also value that Transparent Energy went above and beyond to identify future savings opportunities for us. Those efforts are set to deliver an additional $160,000 of cost reduction in 2024 – or more than $280,000 in total – which goes straight to our bottom line.” Nancy Gardner VP, Channel Partners & Associations Transparent Energy Phone: 732-288-5126 Email: ngardner@transparentedge.com

FIA MAGAZINE | NOVEMBER 2023 10