Business Energy Products

March 18, 2019

Need help finding the best energy product for you business? Here's how they compare. 

 

Available to All Business Types

 

 

Fixed All-Inclusive Price

Avoid price risk by fixing all energy cost components into a single energy price for the duration of your contract.   

  • 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.

Current Risk Level: Very Low

Recommendation: The safest product during current market volatility. Best management practice is to lock in current market prices through August 2022. 

 

 

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: Supports 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.

Current Risk Level: Low/Moderate – could pay higher costs some months. West and South Zone businesses should avoid this. Nodal congestion charges are high in the West and South Zones, and Line-Losses are incredibly high in the West Zone. 

 

Large Commercial and Industrial 

 

 

 

Index Products 

Tied to market rates that change regularly based on supply and demand. The Index is priced off of the Day-Ahead-Market (DAM) or the Real-Time-Market (RTM). 

  • The non-summer months (Nov-May) have averaged less than $32/Mwh ($0.032 per kWh) for the past three years.

  • Greatest savings opportunity.

  • You can lock in a price at any time.

  • Avoid paying price premiums.

  • Best to use when energy prices are declining.

  • Avoid 100% index products during the summers when the grid is operating near peak capacity unless curtailment is possible.   

  • Less risky for businesses that can curtail usage or have on-site generation.

Customer Profile: Businesses willing to take on price risk to avoid paying premiums for the highest savings opportunity.   

Current Risk Level: Very high due to low summer reserves.

Recommendation: Avoid Index products for the periods of July/Aug 2019-2022.

 

 

 

 

Block and Index

Fix a portion of your monthly consumption to limit price risk and still benefit from opportunities in the open market.  You determine the percentage of load to lock into a fixed price, and anything over that amount is priced on the index 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.

Current Risk Level: Medium risk due to low summer reserves. 

Recommendation: Lock in 100% of your July and August load with a fixed price, and let the other ten months float unhedged on the index.   

 

 

 

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 on market prices. If prices are high, a smaller percentage is purchased. This process minimizes pricing variance, allowing you to find a rate near the 12-month average. 

  • Hedge against short-term price swings.

  • A balance between price risk and opportunity cost.

  • A conservative way to obtain a favorable price

Customer Profile: Risk tolerant companies that don’t want to spend time monitoring the energy market. 

Risk Level: Moderate price exposure.

 

 

 

Market Watch/Trigger Pricing 

Set a price target, and be notified or automatically purchase when that price is available. 

  • Set “Strike” Price – The predetermined price you want.

  • Hard Trigger – A purchase is made on your behalf when the strike price is reached. 

  • Soft Trigger – You are alerted when the strike price is hit.

  • “Ceiling” Price – Be notified when prices rise above a certain price to avoid unwanted surprises. 

  • Purchase Fixed Price and index plus block contracts..

  • 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 target in mind and don't want to spend time monitoring the market.

Risk Level: Low/Moderate price risk.

Share on Facebook
Share on Twitter
Please reload

Featured Posts

Business Energy Products

March 18, 2019

1/5
Please reload

Recent Posts
Please reload

Archive
Please reload

Search By Tags
Follow Us
  • Facebook Basic Square
  • Twitter Basic Square
  • Google+ Social Icon

© 2017-2018 by Texas Energy Exchange, LLC

Aggregator Registration #80435

  • White Facebook Icon
  • White Twitter Icon
  • White LinkedIn Icon