What is assumed about this five-property purchasing exercise?
This is an invented portfolio of five hotel accounts in PSE&G’s New Jersey territory. The labels A through E are teaching references, not client identities. Assume each account’s eligibility, legal customer, and purchasing authorization have been verified for the illustration. There is no supplier offer, executed agreement, or observed result. Common management is not itself evidence that one party can bind all customers.
New Jersey’s commercial shopping guidance, reviewed October 12, 2026, supplies the local shopping framework. Actual account and contract review remains necessary. The example assumes comparable supply components only and excludes delivery, taxes, other riders, and any unlisted charge. It does not model a complete portfolio energy budget.
An quantity-weighted portfolio component equals the sum of account-level component costs divided by total purchased quantity. The bills hub explains why dollars, kWh, and billing determinants remain distinct. A single effective component can summarize the teaching comparison while each account’s underlying record remains visible.
How do the individual proposals reconcile?
Assume monthly quantities of 40,000, 60,000, 80,000, 100,000, and 120,000 kWh. Total consumption is 400,000 kWh. Assume individual supply components of $0.090, $0.088, $0.085, $0.084, and $0.083 per kWh respectively. These are invented prices, not current quotes or evidence that a larger account receives a particular price.
Assume every individual component includes embedded broker compensation of $0.001 per kWh. The fee is identified inside the payable price rather than added again. Its portfolio amount is 400,000 × $0.001 = $400. Actual compensation may use another arrangement; retain its written amount or calculation method before comparing real offers.
| Hypothetical account | Monthly quantity | Assumed component | Component cost |
|---|---|---|---|
| A | 40,000 kWh | $0.090/kWh | $3,600 |
| B | 60,000 kWh | $0.088/kWh | $5,280 |
| C | 80,000 kWh | $0.085/kWh | $6,800 |
| D | 100,000 kWh | $0.084/kWh | $8,400 |
| E | 120,000 kWh | $0.083/kWh | $9,960 |
| Total | 400,000 kWh | $0.08510/kWh weighted | $34,040 |
The weighted component is $34,040 ÷ 400,000 = $0.08510 per kWh. The simple arithmetic mean of the five rates is $0.08600, which is different because it gives each account equal weight. Neither figure represents a new supplier offer. The payable costs are the account-level components actually assumed in the table.
What does the combined embedded-fee proposal cost?
Assume a combined proposal covers the same accounts and equivalent components at $0.08420 per kWh, including an embedded fee of $0.00150. Total modeled cost is 400,000 × $0.08420 = $33,680. The difference from individual proposals is $360 for this month. The embedded fee is $600, already included in that total; it should not be added again.
The larger assumed brokerage amount does not automatically make the combined proposal more expensive overall. Its full component is still lower under these invented prices. Conversely, an owner should not ignore the fee merely because the component is lower. Both the disclosed arrangement and the payable economics should be reviewable.
Allocate the combined proposal using actual account quantities. The illustrative account costs become $3,368, $5,052, $6,736, $8,420, and $10,104, summing to $33,680. Account E pays $144 more than its individual alternative, while other differences produce the net portfolio reduction. A portfolio-level result can therefore conceal an unfavorable account-level comparison for one owner.
How does a separate-fee proposal compare?
Assume another proposal lists a supply component of $0.08250 per kWh plus a separate brokerage charge of $0.00200 per kWh. Supply costs $33,000, and compensation costs $800. Total components are $33,800, equivalent to $0.08450 per kWh. Comparing only $0.08250 with the embedded proposals would omit a payable charge.
Under the base quantity, the separate-fee proposal is $240 below individual proposals and $120 above the combined embedded-fee proposal. These are arithmetic differences rather than offers or expected savings. Confirm identical components, start dates, quantity treatment, and commercial obligations before deciding which actual alternative is preferable.
DOE’s utility-rate evaluation guidance supports reviewing each account’s load and rate structure. Even if supply components are coordinated, delivery tariffs and demand charges remain account-specific. A combined rate does not merge the physical meters or eliminate their individual utility determinants.
What changes when one property buys less electricity?
In a lower-volume scenario, assume E consumes 80,000 rather than 120,000 kWh while other quantities remain unchanged. Portfolio volume becomes 360,000 kWh. The individual E component is $6,640, so total individual components become $30,720. Assume solely for this scenario that the combined $0.08420 component remains valid without another adjustment. Its cost becomes $30,312, a difference of $408.
The weighted individual component is now $30,720 ÷ 360,000, approximately $0.08533 per kWh. The changed weighting increases the unit component even though total dollars fall. This demonstrates why a portfolio comparison should preserve both quantities and account allocations rather than interpreting every effective-rate change as a supplier-price change.
DOE’s energy information system guidance describes tracking and analytical capabilities useful for maintaining those records. A real lower-volume case needs the reason, dates, account evidence, and contract treatment. A renovation or outsourced service should not silently alter the bid assumptions without a dated change record.
What happens when an account leaves the portfolio?
Assume E is removed entirely, leaving 280,000 kWh. The remaining individual components total $24,080. If the original combined component continued unchanged, it would cost $23,576. That hypothetical $504 difference depends on a contractual assumption; it is not a right created by common management or by the original spreadsheet.
For an adverse commercial scenario, assume the actual permitted revised component would instead be $0.087 per kWh after removal. Its teaching cost is 280,000 × $0.087 = $24,360, which is $280 above the remaining individual comparison. The invented repricing demonstrates sensitivity. It is not a claim that a supplier would apply that component or that every portfolio agreement allows repricing.
Read account-removal, assignment, customer-change, notice, and any contingent-pricing provisions. Establish which legal customer remains obligated and which party can approve an amendment. A sold hotel or terminated management relationship should not be treated as an automatic deletion from a supply agreement. Keep owner approvals and provider confirmations alongside the updated account schedule.
Which peak-related costs remain outside the summary?
PJM’s PLC and NSPL methodology inventory lists utility-specific obligation methods, including PSE&G. The five hotels’ capacity or transmission treatment must come from actual determinants and agreements. A 400,000 kWh portfolio total cannot establish the sum of tags or a shared capacity obligation.
If a real offer fixes some peak-related costs while another passes them through, the nominal components are not automatically equivalent. Reconcile coverage before applying the table. Avoid adding a tag-based sensitivity to an all-inclusive component that already contains the same cost. Any separate fee should likewise enter each account’s cost once and reach the portfolio total through their sum.
What should the final comparison and execution record contain?
- Verified legal customers, account identifiers, utility classifications, and purchasing authority.
- Account-level monthly quantities and dated changes used consistently by every bidder.
- Equivalent payable components with embedded and separate compensation identified once.
- Property allocations and a weighted portfolio summary that reconcile exactly.
- Lower-volume, removed-account, and revised-term scenarios with assumptions labeled.
- Accepted account schedules, enrollment confirmation, and first-invoice review by property.
The Massachusetts aggregation example uses a public-plan framework, unlike this private portfolio exercise. The resort gas-layer example tests commodity quantities, and the Delaware new-meter example tests account readiness. A portfolio summary should retain those individual account questions instead of replacing them with an assumed scale advantage.