Three of Kemps five main processing plants obtain their natural gas through U.S. Energy Services’ transport service, creating competition and great cost savings.

Challenge
Kemps operates four fluid processing facilities and a cultured plant in the upper Midwest. To curb energy costs, Kemps needs to constantly track energy prices and analyze market trends to ensure it’s always paying the lowest possible energy prices. Additionally, it needs to monitor its contracts on an ongoing basis to catch any errors and make certain the contracts reflect the most current tariffs.

Solution
In 2001, Marigold Foods (now Kemps) enlisted U.S. Energy Services to identify opportunities to maximize its energy dollar. Specifically, Kemps utilized U.S. Energy Services’ expertise for price risk management strategies, transportation and supply issues, usage monitoring, and invoice review. 

Results
Three of Kemps five main processing plants obtain their natural gas through U.S. Energy Services’ transport service, creating competition and great cost savings. In Minneapolis, for example, the utility announces the gas price and within three days, U.S. Energy determines whether it can find its clients a lower price elsewhere. For Kemps, this valuable service has saved tens of thousands of dollars annually. Case in point, the company saves $40,000 to $50,000 per year in energy costs at its Minneapolis plant alone.

“Through our partnership with U.S. Energy Services, we’re in a great position to save money on our energy costs,” said Bob Williams, vice president of operations, Kemps. “We know that we’re always paying the lowest price possible, which gives us greater peace of mind.”

At another Kemps plant, a backup fuel system alternates between using natural gas from the utility company and fuel oil, depending on which fuel is less expensive at the time of purchase. Prior to each month, U.S. Energy Services analyzes the forecasted demand and energy market prices to determine which will be most cost effective. Armed with this information, Kemps can switch its system to run on either fuel. In a market of unprecedented volatility, Kemps has saved more than $90,000 dollars in energy costs since implementing this system in 2005.

“Receiving energy price analysis is especially important considering the (sometimes extreme) volatility of fuel prices,” Williams said. “Having multiple options helps us keep costs down and ensures we stay in line with our budgets.”

Additionally, U.S. Energy Services ensures Kemps’ plants receive a steady energy stream by monitoring any pipeline disruptions from the utility. Pipeline disruptions can be costly and U.S. Energy Services is able to work with utility companies to fix the problems or find alterative natural gas sources to mitigate costs and keep the plants in operation.

If energy costs change and U.S. Energy Services loses its lower-cost advantage, it keeps its clients informed. In the case of one Kemps plant, U.S. Energy Services is the only third-party supplier in the area, and thus is the only means of procuring natural gas for less than the utility rate. Because of this exclusivity, the city wants to impose a tariff change to raise gas transportation costs. As a result, the company is closely tracking its rising delivery rates to determine when it will be more cost-effective for Kemps to buy energy from the city’s utility provider, rather than U.S. Energy Services. Even if it is not the lowest possible cost, U.S. Energy Services’ company integrity ensures its customers are receiving the fairest arrangement possible.

“U.S. Energy Services has really gone to bat for us in looking out for our best interest,” Williams said. “The people there have such an advanced knowledge of the industry that we trust and place great value on the information they provide us.”

U.S. Energy Services is a true partner of Kemps in energy management: together, they set annual energy budgets and assist plants with the best way to manage the budgets. To that end, U.S. Energy Services provides Kemps with consolidated energy reports that track unit costs and consumption levels for each location and company-wide. The reports compare current figures with historical data, so that any discrepancies can be easily pinpointed and addresses, saving Kemps both time and money.

By utilizing U.S. Energy Services’ ability to create competition, serve as price risk management consultant, budget advisor and back office supporter, Kemps has mitigated rising energy costs to improve its bottom line during trying economic conditions.

Background
Kemps LLC manufactures milk, ice cream and other dairy products under a variety of strong brands including Kemps, Hood, Hagan, Green’s and Arrowhead. The company also manufactures a wide range of private label dairy products for major retail and food service customers. Headquartered in St. Paul, Minn., Kemps LLC has more than 1,450 employees serving customers throughout the upper Midwest and East Coast.