Need help finding the best solution to manage energy costs? Here's a breakdown of different energy products available to your business.
Available to All Business Types
Fixed All-Inclusive Price: Purchase years’ worth of power at a fixed guaranteed cost for the full contract term.
Cost certainty for long-term budgeting
Less price-risk
Saves time in the future
Easy to compare between suppliers
Customer Profile: Companies looking for budget certainty even if it means paying a slight premium to do so.
Risk Level: Low – can prevent you from taking advantage of price dips.
Fixed Price with Varying Pass-Through Components: Fix only the cost of your electric supply, but pass-through other cost components that compromise an electricity rate at the actual value each month. Cost components that you can pass-through include: Ancillary Services, Line Losses, and Nodal Congestion Charges.
Ancillary Services: Services supporting the transmission of energy from the power plant to each individual energy user.
Line Losses: The difference of energy produced into the Grid and the amount taken out of the Grid.
Nodal Congestion Charges: The “extra” money paid to generators due to congestion. The most common pass-through component with the lowest price risk.
Customer Profile: Businesses that want to secure a fixed cost for their energy supply, but not wanting to pay premiums on the other cost components for the lowest long-term.
Risk: Low/Moderate – could pay a higher cost some months.
Large Commercial and Industrial Businesses
Index Products: Tied to market rates that change regularly based on supply and demand. The Index can be priced off of the Day-Ahead-Market (DAM) or Real-Time-Market (RTM), priced hourly.
The non-summer months (Nov-May) have averaged less than $32/Mwh ($0.032 per kWh) for the past 3 years.
Greatest savings opportunity.
Can lock in a price at any time.
Avoid paying price premiums.
A strategy to avoid volatile market conditions and capitalize on dips in the market.
Great option when energy prices are declining.
Requires energy users to monitor market prices during the summers when the grid is operating near peak capacity.
Less risk for businesses that can curtail usage during intervals of high prices.
Customer Profile: Typically, businesses use an index price as a bridge to wait out a period of high prices. Or, businesses with a high-risk tolerance that are willing to take on price risk to avoid paying premiums for a more significant savings opportunity.
Risk Level: High market price exposure and greatest savings potential.
Block and Index: Allows you to fix a portion of your monthly consumption at a fixed price to limit risks while allowing you to benefit from opportunities in the open market. You determine what percentage of your load you want to lock into a fixed price, and anything over that amount is purchased at the market price each month.
Perfect for businesses that can curtail a portion of their usage during intervals of high prices.
Requires energy users to monitor market prices during the summers when the grid is operating near peak capacity.
Great for businesses that are expanding to avoid overage penalties.
Customer Profile: Perfect for risk-tolerant businesses that want to hedge price risk with certainty. The block portion of this product allows you to keep operating during intervals of high prices without having to curtail consumption down to zero.
Risk Level: Moderate market price exposure
Tranche/Minimized Volatile Pricing: Allows you to purchase a small percentage of your load at regularly scheduled intervals over a long time horizon. The amount of each purchase is adjusted based upon market prices: if prices are elevated, a smaller percentage of your load is purchased. This process minimizes pricing variance, allowing you to find a rate near the mean.
Hedge against short-term price swings
A balance between price risk and opportunity cost
Limits exposure to volatility and timing the market
A conservative way to obtain a favorable price
Customer Profile: Risk tolerant companies that don’t want to spend too much time monitoring the energy market. This is a proven method to limit price exposure while benefiting from market fluctuations over time. This product may not return the lowest price, but you won’t be burned if the market is volatile.
Risk Level: Moderate market price exposure
Market Watch/Trigger Pricing: Allows you to find a specific price without having to monitor the market each day.
Set “Strike” Price – The predetermined price you want.
Hard Trigger – A purchase is made on your behalf when the strike price is hit for your next contract.
Soft Trigger – You are alerted when the strike price is hit.
“Ceiling” Price – You are notified when prices rise above the ceiling price to manage upward price trends.
This can be used for Fixed Price and index plus block solutions.
Can be utilized for contracts in the future or contracts now if you’re on the index and wanting to lock in a specific price.
Customer Profile: Businesses that have a specific price in mind and believe that market prices will drop.
Risk Level: Low/Moderate market price exposure
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