For an electric arc furnace plant, electricity is the largest controllable cost, and the contract decides how much of it is controllable. Two plants with the same melt schedule can pay very different landed prices depending on how they combine distribution licensee supply, banked renewable energy, open access purchases and spot market power. The energy rate is only the start, since wheeling, surcharges, losses and demand charges all land on the final bill. Procurement teams can model landed cost across their contract options using real load data before the next renewal.
Buy Power for the Load You Actually Run
iFactory steel energy analytics shows how your melt shop load meets banking, open access and merchant power options, so buyers negotiate against real demand.
What Sits Inside a Landed Electricity Price
The headline energy rate is one layer. The final cost per unit includes everything between the generator and your furnace transformer.
Illustrative proportions only. Charges and their weight differ by state, voltage level and contract.
Three Routes to Buy Electricity
Large plants usually blend routes. Each has a different mix of price, risk and flexibility.
Distribution licensee supply
Simple and regulated, with a tariff structure that includes demand and time-of-day components
Open access purchase
Buy from a generator or trader through the grid, with network charges and surcharges added
Merchant and exchange power
Buy at market prices for flexibility, accepting price swings that can be steep at peak times
Banking, Open Access and Merchant Power Compared
Rules differ by state and regulator, so treat this as a framework and confirm local terms.
| Option | Where It Helps | Watch Out For |
|---|---|---|
| Energy banking | Shifts surplus renewable energy to times of need | Banking limits, charges and settlement rules |
| Open access | Lowers energy cost for large steady loads | Surcharges, scheduling discipline and deviation settlement |
| Merchant power | Covers shortfalls and short-term needs | Price spikes during peak demand |
| Licensee supply | Backup and base availability | Higher cost and demand charge structure |
A Four-Step Contract Optimization Process
Start from the load, not from the offers on the table.
See Your Power Cost by Route Before You Renew
Share your recent bills, load data and contract terms. We will model landed cost across your route options and show where the biggest savings sit.
What Experienced Power Buyers Look For in a Steel Plant Contract
Frequently Asked Questions
Does a lower energy rate always mean a cheaper contract?
No. Network charges, surcharges, demand charges and losses can erase a lower energy rate. Compare landed cost per unit across a full year of your own load, not the quoted rate alone. A short worksheet that lists every charge per unit for each offer makes the comparison fair and easy to share with finance. Compare your offers on a landed cost basis with our team before signing.
How should an EAF plant think about banking?
Banking helps when renewable generation and your melt schedule do not line up. The value depends on banking limits, charges and settlement rules in your state. Model it against interval data, since a peaky load uses banked energy differently from a flat one. Seasonal patterns matter too, because renewable output and your own production rhythm can peak at different times of the year.
What are the main risks of open access?
Schedule accuracy, deviation settlement and changes in surcharges are the usual ones. EAF loads swing quickly, so forecast quality matters. Agree internal rules for who may change schedules close to delivery, since late changes are a common source of deviation charges. Test your load forecast against open access scheduling rules before committing volume.
When does merchant power make sense?
It suits short-term gaps and flexible volumes, especially when your schedule can shift away from price spikes. It is risky as the main source for a large plant. Set limits on exposure and agree who can approve spot purchases during peak periods. Document the approval limit and price ceiling for spot purchases, so urgent decisions made during peaks stay inside agreed risk.
How do we know a contract is working?
Track landed cost per unit and per tonne against a baseline, along with deviation charges and peak demand costs. Review monthly with finance and operations together. Share the same dashboard with operations, so production choices and procurement choices are discussed with the same numbers. Plan the metrics for your contract review on a short call.
Turn Your Load Profile Into a Better Power Contract
Bring your bills, interval data and contract terms. We will show landed cost by route and where renegotiation could help.
