Energy procurement and delivery operations depend on numerous contracts with private and municipal entities, but the language inside each contract varies widely from state to municipality to private entity – and across contract types. Understanding the provisions inside each of these documents is critical to making everyday decisions, analyzing projects side-by-side, and avoiding serious pitfalls. However, current contract review processes are time-consuming, arduous, and very expensive. So much so that many energy companies take on what they see as unavoidable risk – especially in merger and acquisition due diligence where understanding the details in these documents could make or break a deal.
AI for Contract Intelligence
When we hear Artificial Intelligence (AI) or Machine Learning (ML) and utilities, we may think of articles about load forecasting, yield optimization, demand management, and even energy theft. These are great applications for AI and ML, but we tend to narrowly think of AI on the front lines of new technology. What about the back office? Can AI assist in merger and acquisition due diligence? Do we really understand our easements and power purchase agreements? Are we tracking renewals, production requirements, payments, and obligations, or are we at risk for accidental lapses? Can AI really solve these issues? Yes.
AI can provide business value to energy in a way you may least expect. Technology now exists to dig deep into contracts and other agreements and put every necessary provision at your fingertips quickly and accurately, reading words, sentences, and paragraphs in energy contracts and other agreements regardless of vocabulary used and no matter how buried.
Energy companies have contract intelligence at their fingertips in minutes or hours, not weeks or months. These companies now have a deep understanding of right-of-way and easement details such as Rights, Obligations & Payments, Renewals & Extensions, Surface Restrictions, Construction Limitations, Line Rights, Ingress and Egress, Restoration Requirements; as well as Power Purchase Agreement provisions such as Environmental Attributes, Production Guarantee, System Equipment, Change in Law, Take-and-Pay, Customer Purchase Options, Tax Credits, Appropriation, Labor Requirements, Force Majeure, Indemnities, Limitation of Liability, and Change of Control.
Making Informed Decisions
Rather than slowly poring through documents, making assumptions, and hoping to avoid risk, people now analyze opportunity, find competitive advantage, and act as a strategic asset. AI can take the repetitive and mundane machine tasks away from humans and give them the information needed to move forward with project proposals, procurement, and pricing options with confidence.
The potential for AI to create improvements in the energy industry goes well beyond frontline technology. The details in your energy contracts and power purchase agreements matter. Companies can save millions by gaining access to their most critical information and making informed decisions – faster, smarter, and more strategically.
In 2017, ThoughtTrace launched the first industry-specific Document Intelligence and Contract Analytics platform that provides value on day one with minimal training and setup. Leveraging AI/ML as a complement to human expertise, the ThoughtTrace platform identifies critical obligations in contracts exponentially faster and with greater accuracy than traditional methods. ThoughtTrace reads, organizes, and surfaces data that gives users operational agility, actionable insights, and decision-making superpowers.