CEP Procurement Strategies & Contract Management 3

Question 1

Which procurement strategy is most appropriate for a company with strong ESG commitments and a desire for additionality in renewable energy?

Accepted Answer

Signing a long-term virtual power purchase agreement (VPPA)

Answer

A VPPA with a new renewable project delivers additionality by directly financing new clean generation capacity.

Question 2

A 'portfolio' procurement strategy in energy management refers to:

Accepted Answer

Dividing energy volume across multiple contract types, terms, and suppliers

Answer

Portfolio procurement spreads risk by using a mix of fixed, indexed, and spot purchases across different time horizons and counterparties.

Question 3

In natural gas contracts, what does 'interruptible service' mean for an industrial buyer?

Accepted Answer

The supplier may curtail gas delivery during peak demand periods

Answer

Interruptible service allows the supplier or pipeline to curtail deliveries, typically when system demand peaks, in exchange for lower rates.

Question 4

What is the function of an energy procurement policy within an organization?

Accepted Answer

To establish governance, risk tolerances, and decision-making authority for energy buying

Answer

A procurement policy sets the organizational framework—risk limits, approval thresholds, and permissible contract structures—guiding consistent decision-making.

Question 5

Which of the following best describes a 'layered' or 'tranche' buying strategy?

Accepted Answer

Buying portions of future energy volume at different times to average the entry price

Answer

Tranche buying involves purchasing incremental volumes over time, averaging the cost basis and reducing the risk of buying at a single price peak.

(CEP) Certified Energy Procurement Professional Practice Test

(CEP) Certified Energy Procurement Professional Practice Test

CEP Procurement Strategies & Contract Management 3