Risk Management Strategy Becomes Key to Budget Control

Cincinnati, OH, March 30, 2006 --(PR.com)-- As the energy market continues to fluctuate with little predictability, CFOs and operations executives are continually facing the task of deciding how to handle volatile energy bills. While balancing the value of risk management versus budget certainty with regards to energy procurement, the team at Cadence Network has demonstrated that their risk management strategies can harness haphazard and unexplained energy spends and help create significant budget control.

During a recent presentation at the Edison Electric Institute’s Spring National Accounts Workshop, Joe Falci, Director of Rate Analysis & Energy Procurement Consulting for Cadence Network, presented “Maximizing the Value of Today’s Deregulated Energy Markets”. As part of the presentation, Falci stated that executives needed to know that there is a significant difference between budget certainty and risk management.

“The definition of risk is the likelihood of any unknown event taking place, whether good or bad,” Falci said. “That type of risk is measured on a bell curve. The goal of an energy procurement risk management strategy would be to chop off the ends of the bell curve, reducing the possible number of outcomes and managing the risk better. Companies that prefer budget certainty may decide to lock in a price today, but they preclude themselves from taking advantage of lower market prices that may occur in the future.”

Cadence believes that there is an equal opportunity for energy prices to increase or decrease based on both technical and fundamental factors affecting energy, including indicators such as weather trends. Companies that take advantage of those fluctuations often have more favorable outcomes with reduced energy costs.

“By analyzing both the physical and financial markets and predicting what is expected to happen, operations executives, CFOs and facility managers can make better buying decisions for their organization,” Falci said. “Using a diversified approach and taking advantage of the deregulated energy market allows us to create a strategy for customers which takes advantage of dips that may occur in the wholesale energy markets, while still preserving budget stabilization.”

To illustrate, Falci detailed a case study of a national retailer with 85 stores in California. Using a strategy that Cadence experts recommended, this “medium box” retailer was able to take a diversified approach to energy procurement and secure an average cost lower than the originally anticipated goals.  This approach provided both the balance and control the client required while also providing significant savings.

Cadence Network, Inc. delivers comprehensive utility, telecommunications and lease facility expense management to chain stores, multiple site businesses and government. The people, services and software of Cadence Network enable business and government to gain control over electric, gas, water, waste, lease and telecommunications expenses by streamlining such services as invoice auditing and payment, rate analysis, and procurement. At work in over 250,000 locations nationwide, Cadence Network is an EnergyStar Partner of the United States Environmental Protection Agency and a proud supporter of The Arbor Day Foundation. More information can be accessed at www.cadencenetwork.com or by calling 866.Cadence.

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Contact: Jennifer Riegert
Division Leader, Justice & Young
jriegert@jypublicrelations.com
513.388.4700 ext. 3015

Editor’s Notes:
Falci available for interview