Practice Test Geeks(CEP) Certified Energy Procurement Professional Practice Test
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Procurement Strategies & Contract Management Flashcards

7 cards from real CEP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

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  1. A company wants to hedge against price volatility while retaining upside potential. Which procurement structure best achieves this?

    Answer: Index-based contract with a price cap

    An index-based contract with a price cap limits downside risk while allowing the buyer to benefit if market prices fall below the cap.

  2. What does 'basis risk' specifically refer to in energy procurement?

    Answer: The difference in price between the delivery point and the pricing hub

    Basis risk is the price differential between a regional delivery point and the benchmark trading hub (e.g., ERCOT North vs. Henry Hub).

  3. In a Request for Proposal (RFP) for electricity supply, which element is MOST critical to include to enable apples-to-apples supplier comparison?

    Answer: Standardized load data and a common pricing template

    Standardized load data and a uniform pricing template ensure all suppliers bid on identical terms, enabling direct price comparison.

  4. Which contract term allows an energy buyer to exit a fixed-price agreement early if market prices drop significantly?

    Answer: Termination for convenience provision

    A termination for convenience clause allows the buyer to exit the contract, typically subject to an early termination fee.

  5. A manufacturer with highly seasonal energy demand should prioritize which contract feature?

    Answer: A swing or tolerance band allowing volume variation

    A swing or tolerance band permits the buyer to take more or less energy than the contracted volume within defined limits, accommodating seasonal variation.

  6. What is the primary purpose of a 'step-up' provision in a natural gas supply contract?

    Answer: To allow an alternate supplier to fulfill obligations if the primary supplier defaults

    A step-up provision designates a backup counterparty who assumes supply obligations if the primary supplier fails to perform.

  7. When evaluating supplier bids on a total cost of ownership (TCO) basis, which cost is most commonly overlooked?

    Answer: Capacity charges and ancillary service costs

    Capacity charges and ancillary services are often not explicitly quoted but can represent 30–50% of total electricity costs in many markets.