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.
Read the first 7 Procurement Strategies & Contract Management flashcards as text
What is 'demand response' as a procurement strategy tool?
Answer: Reducing or shifting energy consumption during peak periods in exchange for financial incentives
Demand response programs allow buyers to reduce grid stress during peaks and earn capacity or energy payments by curtailing load.
An energy buyer discovers mid-contract that their supplier has been acquired. Which contract provision most directly protects the buyer?
Answer: Change of control clause
A change of control clause gives the buyer rights—such as consent approval or early termination—when ownership of the supplier changes.
Which of the following best describes 'load shaping' in the context of energy procurement?
Answer: Adjusting the contracted energy profile to match the buyer's actual consumption pattern
Load shaping aligns the contract's delivery schedule with the buyer's usage profile to minimize imbalance charges and improve hedge effectiveness.
In deregulated energy markets, which entity is responsible for balancing supply and demand in real time?
Answer: The Independent System Operator (ISO) or Regional Transmission Organization (RTO)
ISOs and RTOs operate the bulk power system, dispatch generation, and ensure supply-demand balance across their footprint in real time.
A company operating in multiple deregulated states should consider which procurement approach to maximize leverage?
Answer: Aggregated multi-site RFP combining all locations to increase buying power
Aggregating load across multiple sites into a single RFP increases the buyer's volume and attractiveness, driving more competitive supplier pricing.
What is the key difference between a 'fixed' and a 'variable' retail energy contract?
Answer: Fixed contracts lock in a set price for the term; variable contracts fluctuate with market or index prices
Fixed-price contracts provide price certainty for the contract term, while variable-price contracts expose the buyer to ongoing market price movements.
Which risk management tool allows an energy buyer to set a maximum price while still benefiting if market prices decline?
Answer: Energy price cap (call option)
An energy price cap (call option) sets a ceiling on cost while allowing the buyer to purchase at lower market prices if they fall below the cap.