Pittsburgh Penguins Reduce Energy Cost Exposure with Seasonal Load Following Strategy

Client Overview: Pittsburgh Penguins

The Pittsburgh Penguins operate PPG Paints Arena and a dedicated practice facility in Pittsburgh, Pennsylvania. As a professional hockey organization, the Penguins manage energy-intensive facilities that require reliable electricity and natural gas throughout the year to support ice-making, HVAC, refrigeration, lighting, event operations, concessions, and team training.

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The combined electricity usage included in the procurement process totaled approximately 20,000 MWh annually. With significant seasonal energy requirements and exposure to changing PJM capacity costs, the Penguins needed an energy procurement strategy that could provide budget protection while maintaining flexibility to take advantage of favorable market conditions.

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Challenge: Rising Energy Costs & Seasonal Market Exposure

The Pittsburgh Penguins faced several energy-related challenges:

• Approximately 20,000 MWh of annual electricity usage across PPG Paints Arena and the practice facility, creating significant exposure to wholesale energy market conditions.

• The need to source both electricity and natural gas through competitive third-party supplier procurement.

• Increasing PJM capacity prices contributing to higher electricity supply costs and creating additional pressure on the organization's energy budget.

• Significant winter and summer energy requirements associated with ice-making, HVAC, arena operations, and year-round facility usage.

• The need to protect the organization from higher energy prices during volatile periods while maintaining flexibility during lower-risk market conditions.

• A desire to avoid being locked into a traditional fixed-price structure for the entire year when lower-cost market opportunities could be available during certain seasons.

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Without a procurement strategy tailored to the Penguins' seasonal operating profile, the organization faced increased exposure to energy price volatility and potentially unnecessary fixed-price premiums.

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Solution: Seasonal Load Following Energy Strategy

Our energy consulting firm partnered with the Pittsburgh Penguins to develop a seasonal electricity procurement strategy tailored to the organization's facility usage, market exposure, and risk tolerance.

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Rather than placing the entire electricity load into a traditional fixed-price contract, we structured a seasonal load following strategy that provided price protection during higher-risk periods while allowing the Penguins to participate in market pricing during lower-volatility months.

 

1. Competitive Third-Party Supplier Procurement

• Conducted a competitive bid process for electricity and natural gas supply.

• Evaluated third-party supplier offers for both PPG Paints Arena and the Penguins' practice facility.

• Compared pricing structures and contract options based on the organization's projected energy requirements.

2. Seasonal Load Following Contract

• Structured the electricity procurement around the Penguins' seasonal operating profile.

• Implemented a load following strategy rather than relying exclusively on a traditional fixed-price product.

• Designed the contract to balance energy cost protection with market flexibility.

3. Winter & Summer Fixed-Price Protection

• Secured fixed pricing during winter and summer periods when energy requirements and market exposure can be more significant.

• Provided greater budget certainty during key seasonal operating periods.

• Reduced the organization's exposure to potential price spikes during higher-risk months.

4. Fall & Spring Spot Market Participation

• Allowed the Penguins to participate in spot market pricing during fall and spring periods.

• Avoided unnecessarily fixing the entire annual load when market conditions presented opportunities for lower-cost pricing.

• Created the potential to capture market savings during lower-volatility periods.

1. PJM Capacity Cost Management

• Evaluated supplier proposals with increased PJM capacity costs in mind.

• Incorporated capacity-related costs into the overall supplier comparison and procurement strategy.

• Focused on reducing the impact of rising capacity costs on the Penguins' total delivered electricity expense.

1. Facility-Specific Energy Strategy

• Considered the operational requirements of both PPG Paints Arena and the Penguins' practice facility.

• Accounted for high-load activities including ice production, HVAC, refrigeration, lighting, events, and training operations.

• Developed a procurement approach based on how the facilities actually consume energy throughout the year.

 

Results: Improved Market Positioning & Energy Cost Control

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