Natural gas procurement is much more complicated than buying electricity, with considerably higher risk and more opportunities for expensive mistakes
The primary risk complication is that gas contracts have monthly volume targets, while most electricity contracts don’t. You must commit to these monthly targets, and then you pay for some degree of variation (up and down), called the “swing.”
If you exceed your swing tolerance in any month, the supplier must buy more gas at spot market prices, which can be much higher than your contract rate.
We mitigate swing tolerance risk in three ways:
- Our extensive gas experience helps you set appropriate monthly targets, incorporating both your process needs (if you’re a manufacturer) and your facility needs (such as heating and cooling).
- You can protect yourself with higher swing, but the more swing protection you buy, the more expensive your contract becomes. Our auction results clarify the price vs. risk relationship. We’ll help you select the right balance of risk and reward to fit your budget and your energy strategy.
- We offer guidance with the details of contract language. It’s critical, for example, to ensure that your monthly “balancing” uses the correct price index, e.g., Nymex or Gas Daily.
Put us to the test: See how a Licensed Commercial Energy Consultant compares to a traditional broker…We can run a “trial” auction for you at no cost or obligation. You do not have to accept the results (unless you like them!), and there are no contracts you must sign. Give us a call today to arrange a test. You have nothing to lose and possibly much to gain.
Call Us Today for a No-Obligation Conversation: Kit Gutteridge, President, AEP 484.406.5400 x101