California Grocery Chain Overcomes Gas Pricing Volatility and Locks in a 76% Price Reduction Worth $3.5 Million Per Year
Super Center Concepts Inc. operates one of the largest independently-owned grocery supercenter chains in the greater Los Angeles metropolitan area. It manages more than 40 grocery chain outlets under the Superior Grocery name.
Gas rates in California experienced a significant surge during the time period spanning 2022 and early 2023. The utility’s natural gas supply rates exhibited extreme volatility leading to unpredictable increases in their utility bills each month and making it difficult for them to manage their overall cost.
In January 2022, observed rates for natural gas were $.83569 per therm. By January 2023, rates had risen to $3.44892 per therm. At the peak of the price hike, Superior Grocery’s natural gas provider was charging as much as $3 per therm.
Natural gas utility bills are typically calculated by multiplying the number of therms consumed each month and the rate per therm. One therm is equivalent to 100 cubic feet of natural gas.
Superior Grocery hired Cost Control Associates (CCA) to provide energy procurement and utility data management services with the goal of being able to reduce and better manage therm rates and expense unpredictability.
CCA negotiated a new natural gas rate for Superior Grocery using its existing utility company relationships and collective buying power. It established an ongoing data management function for the company by consistently reviewing the utility rates they were being charged, validating grocery chain usage accuracy, and budgeting and forecasting for improved predictability.
In February 2023, Superior Grocery paid $381,500 for its national gas consumption. After CCA secured a new and fixed monthly utility rate for the grocer, Superior Grocery’s monthly energy bill was reduced by 76% ($292,100) for a new monthly total of $89,400. With continued use of CCA’s negotiated lower therm rate and data management services, savings are expected to grow to as much as $3.5 million annually.
Utility Data Management
Joe Scicutella is an energy procurement analyst for Cost Control Associates. He helps his clients obtain energy supply at the optimal price. He keeps his thumb on the pulse of the energy marketplace by monitoring supply, providing insights, working with suppliers to obtain pricing and negotiate contracts. Joe currently manages more than $2.5 billion in total client annual spend and has saved his clients more than $2.8mm on costs since July 2019. Learn more.