Procurement Strategies & Contract Management Flashcards
7 cards from real CEP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Procurement Strategies & Contract Management flashcards as text
Which procurement strategy is most appropriate for a company with strong ESG commitments and a desire for additionality in renewable energy?
Answer: Signing a long-term virtual power purchase agreement (VPPA)
A VPPA with a new renewable project delivers additionality by directly financing new clean generation capacity.
A 'portfolio' procurement strategy in energy management refers to:
Answer: Dividing energy volume across multiple contract types, terms, and suppliers
Portfolio procurement spreads risk by using a mix of fixed, indexed, and spot purchases across different time horizons and counterparties.
In natural gas contracts, what does 'interruptible service' mean for an industrial buyer?
Answer: The supplier may curtail gas delivery during peak demand periods
Interruptible service allows the supplier or pipeline to curtail deliveries, typically when system demand peaks, in exchange for lower rates.
What is the function of an energy procurement policy within an organization?
Answer: To establish governance, risk tolerances, and decision-making authority for energy buying
A procurement policy sets the organizational framework—risk limits, approval thresholds, and permissible contract structures—guiding consistent decision-making.
Which of the following best describes a 'layered' or 'tranche' buying strategy?
Answer: Buying portions of future energy volume at different times to average the entry price
Tranche buying involves purchasing incremental volumes over time, averaging the cost basis and reducing the risk of buying at a single price peak.
Under FERC Order 888, what right did industrial customers gain in wholesale electricity markets?
Answer: Open, non-discriminatory access to transmission services
FERC Order 888 mandated open access to transmission infrastructure, enabling competitive wholesale power markets to develop.
A contract clause stating that neither party is liable for non-performance due to an unforeseen event beyond their control is known as:
Answer: Force majeure clause
A force majeure clause excuses performance obligations when extraordinary, unforeseeable events (e.g., natural disasters, grid emergencies) prevent contract fulfillment.