Which Is Better: Fixed or Floating Electricity Prices?

Size: px
Start display at page:

Download "Which Is Better: Fixed or Floating Electricity Prices?"

Transcription

1 Which Is Better: Fixed or Floating Electricity Prices?

2 Which Is Better: Fixed or Floating Electricity Prices? We tend to disparage monopoly power. But if utility distribution systems were not subject to monopoly power we would have chaotic and unreliable electricity supply: The wires and transformers and meters and engines that transmit and consume this power would blow up constantly at every shift in load. Throughout the United States utilities have a monopoly on the distribution of electricity through the grid of overhead and underground wires. Every minute of every day these utilities and the system operators that coordinate them balance the supply of generators and demand of consumers. In contrast to the electricity distribution system, the sale of electricity that flows on those wires is a different story. Since the late 1990s, utility monopoly power has been curtailed in some 20 states and the District of Columbia. Most US electric consumers living in those states have a choice. They can buy their electricity from the utilities that serve everybody. Or they can buy the electricity from third party suppliers. For those consumers who can only buy from their local utility, the utility sets the price. While there are different prices for different classes of customer for example, large commercial, small commercial, residential -- all customers within a class receive the same price. For an explanation about how utilities set their prices, see our article, How Do Utilities Set Their Prices? In contrast to utilities, third party suppliers have more flexibility in pricing commodity or generation charges. Some charge variable prices that can change daily depending on actual costs. Others lock in prices for terms of months or years. For an explanation about how third party suppliers set their prices, see our article, How Do Electricity Marketers Set Their Prices? In this article we discuss the merits of choosing a variable or floating price such as that offered by utilities or third party marketers or a fixed price. Variable Price Supply. Utility prices are essentially variable or floating: Utilities fix their prices for a limited period of time such as 3 or 6 months. Third party suppliers have more flexibility: They can offer monthly variable prices or prices that are fixed for seasons such as the winter or summer or for periods of 3, 6, 9 or 12 months. 1

3 A consumer who chooses a variable or floating price is subject to changes in the market price of electricity. Market prices respond to many different factors which we discuss in our article, Why Do Electricity Prices Change? In choosing a variable price a consumer has probably concluded that there is a greater likelihood prices will decline than rise. When choosing a variable or floating price from a third party marketer a consumer is probably also concluding that the marketer s price will be less than the utility s price. Indeed, many marketers promise savings compared to local utility prices. Caveat emptor! Let the buyer beware: Variable prices do not offer guaranteed savings, irrespective of the marketer s promises. The marketer s price may be less than the utility s price in the first month but there is no guarantee against utility prices dropping or the marketer s price rising in subsequent months. In fact, third party suppliers that offer variable prices will generally not save consumers money compared to their local utility. Third parties only offer commodity supply and charge for electricity generation; distribution and demand charges do not change and are passed through from the utility. A variable price for commodity offered by a third party supplier will generally, over a long period of time, exceed the utility price. This follows from the fact that the utility does not build a profit margin into its generation charge, which is also variable, whereas third party marketers do. The only mitigating factor is local sales tax which in some states is applied to the commodity portion of utility supply but not of third party supply. Thus, few consumers will obtain any benefit from third party variable prices unless they are willing to watch competitive pricing and switch suppliers monthly and the utility price, in territories where third party supply is not subject to sales tax, is greater than third party supply by at least the amount of the tax. Consumers should bear another factor in mind: The reason that some suppliers do not offer fixed price supply is because they can t. In order to offer fixed price supply the third party marketer must have a balance sheet that can support long term hedges in the financial markets. Otherwise, the marketer would put itself and its bankers, shareholders and personnel at risk that markets would skyrocket and the marketer would be forced to buy high priced electricity to meet low price contract demand from customers. Only a handful of marketing firms have sufficient balance sheets to support these hedges. Accordingly, some marketing firms will tout the benefits of variable price contracts because they have nothing else to sell. They will tell consumers that utility prices are going up despite the fact that there is never any certainty about future prices. Or they will tell consumers that their prices will save money below utility prices, even though (i) the utility prices may go down in the future and (ii) the utility price itself is a form of variable or floating rate contract. 2

4 Fixed Price Supply. As we noted, utilities do not offer long term fixed price supply to consumers behind their systems. While prices may be fixed for short terms of up to a half year, any changes in the cost of generation during those intervals will be passed along to consumers during a later interval. Third party suppliers are not prevented by regulators from offering long term hedges. If market prices go down after a consumer locks in a hedge, the supplier is not obliged to offer the lower prices, as regulators insist utilities offer their consumers. Buyers of long term fixed price supply may or may not save money relative to utility pricing. If fuel prices and thus generation drops in price, a long-term hedge will cost more than if the consumer remained with utility pricing or variable pricing. To see how hedges can end up costing a consumer money see the chart comparing the forward one year curve of wholesale natural gas prices to the actual wholesale prices for the period. Natural gas pricing drives electricity pricing in the Northeast and much of the United States because the fuel is used by many electric generating stations. History of 12-Month Forward Strip vs. Actuals Wholesale Gulf $$/MMBtu $6 $5 $4 $3 $2 $1 $0 Forward 12 Months Actuals 3

5 As the chart shows, if a consumer in June of 2011 had locked in one year forward natgas prices at about $5, he or she would have sustained a loss of some $2 per mmbtu or almost 40%. Electricity prices during such period dropped by a similar magnitude. Perhaps not surprisingly, energy suppliers do not like to speak about forwards vs. actuals. The chart you see here is published by Solomon weekly; to our knowledge, no other energy supplier follows suit. Why? Probably because consumers might be reluctant to lock in any hedges if they knew the risks of getting it wrong were this great. Term prices can be locked in for periods of months or years. The length of a hedge will vary based on the willingness of suppliers in the market to offer protection. It is rare to find suppliers willing to offer long term hedges for commercial consumers longer than two or three years. A supplier that offers a long term hedge is not gambling on forward prices; it will hedge its supply costs to assure a margin. To hedge supply it much find other willing sellers. Yet liquidity (i.e., sufficient buyers and sellers to quote prices) is limited beyond two or three years. If market prices increase during the term of a hedge a consumer will save money compared to utility or variable pricing. If prices fall the consumer will lose money. In either case, at the end of the fixed price term prices for a renewal hedge could be higher and the new hedge could be more costly. Conclusion Ultimately the decision to purchase fixed or floating should depend on a consumer s tolerance for risk. If a business is able to pass the cost of higher electricity through to its customers it should never hedge. Variable price makes sense. If a business is able to change its prices to incorporate higher costs, it may be able to pass on some of these costs, depending on competition. Fixed price makes sense for the short term in order to protect against competition. If a business is unable to pass on higher costs and could be forced to make major changes in its business e.g., lay off workers it should always hedge. Fixed price is mandatory. If a business wishes to gamble that prices will go lower it should go into a different business. 4

How Do Energy Suppliers Make Money? Copyright 2015. Solomon Energy. All Rights Reserved.

How Do Energy Suppliers Make Money? Copyright 2015. Solomon Energy. All Rights Reserved. Bills for electricity and natural gas can be a very high proportion of a company and household budget. Accordingly, the way in which commodity prices are set is of material importance to most consumers.

More information

Myth Busters: Beware of Solar Scams. Copyright 2015. Solomon Energy. All Rights Reserved.

Myth Busters: Beware of Solar Scams. Copyright 2015. Solomon Energy. All Rights Reserved. In our four year history we have reviewed dozens of proposals from solar contractors that are too good to be true. Perhaps we should not be so surprised: New industries often attract sales hustlers that

More information

Milk Hedging Strategies Utilizing Futures & Options

Milk Hedging Strategies Utilizing Futures & Options Milk Hedging Strategies Utilizing Futures & Options A Basic Understanding of hedging and forward pricing scenarios Utilizing both futures & options traded at the Chicago Mercantile Exchange focusing on

More information

Manitoba Public Utilities Board Guide to the Purchase of Natural Gas in Manitoba

Manitoba Public Utilities Board Guide to the Purchase of Natural Gas in Manitoba Manitoba Public Utilities Board Guide to the Purchase of Natural Gas in Manitoba As a Manitoba natural gas consumer, you now have more choices available for buying the natural gas you use in your home

More information

Hedging Natural Gas Prices

Hedging Natural Gas Prices Hedging Natural Gas Prices Luke Miller Assistant Professor of Finance Office of Economic Analysis & Business Research School of Business Administration Fort Lewis College Natural Gas Industry U.S. natural

More information

2004, R-3510-2003 NATURAL GAS BUYER S GUIDE

2004, R-3510-2003 NATURAL GAS BUYER S GUIDE NATURAL GAS BUYER S GUIDE The Provincial government has approved new rules that now allow Enbridge Gas New Brunswick to provide more comprehensive service to its customers. Effective May 22, 2003, Enbridge

More information

Guide to business gas purchasing for SMEs. Tomorrow's rates at today's prices. businessgas.com

Guide to business gas purchasing for SMEs. Tomorrow's rates at today's prices. businessgas.com Guide to business gas purchasing for SMEs BusinessGas.com businessgas.com 0800 157 7175 Helping you find the cheapest business gas rates This guide has been designed for anyone running a small or medium-sized

More information

Energy Management - Street Light Electric Procurement. December 4, 2006

Energy Management - Street Light Electric Procurement. December 4, 2006 Energy Management - Street Light Electric Procurement December 4, 2006 1 Outline Background information Texas energy market structure Why now? What this procurement is not What it is How energy markets

More information

Quarterly Wholesale/Retail Price Report

Quarterly Wholesale/Retail Price Report Quarterly Wholesale/Retail Price Report February 29 Contents Overview 3 Summary of analysis 1. Customer bills, wholesale costs and margins 5 Electricity Gas 2. Scenario analysis: Impact of retail price

More information

Who Are the Best Retail Energy Suppliers?

Who Are the Best Retail Energy Suppliers? We are often asked by our clients to help them find reasonably-priced electricity and natural gas supply. Even if we help them lower their energy usage with solar, LEDs and other technologies, these strategies

More information

BUSM 411: Derivatives and Fixed Income

BUSM 411: Derivatives and Fixed Income BUSM 411: Derivatives and Fixed Income 2. Forwards, Options, and Hedging This lecture covers the basic derivatives contracts: forwards (and futures), and call and put options. These basic contracts are

More information

Physical Natural Gas

Physical Natural Gas Risk Management 101 Physical Natural Gas Gas Measurement Mcf Thousand cubic feet Volumetric measurement MMBtu Million British Thermal Units Heating value measurement of gas based on a standard heat value

More information

C. System Operations, Reliability Standards and Capacity Management

C. System Operations, Reliability Standards and Capacity Management C. System Operations, Reliability Standards and Capacity Management 1. Demonstrate that the restructuring plan will maintain the standards and procedures for safety and reliability presently in effect

More information

Check the Facts. New Electricity Market Offers Consumers Fine Print and Frustration. Publisher of Consumer Reports. Director Reggie James

Check the Facts. New Electricity Market Offers Consumers Fine Print and Frustration. Publisher of Consumer Reports. Director Reggie James Check Publisher of Consumer Reports Southwest Regional Office 1300 Guadalupe, Suite 100 Austin, Texas 78701 www.consumersunion.org Contact: Janee Briesemeister 512-477-4431 x117 brieja@consumer.org Director

More information

Alice Miller Energy Consultant September 28, 2011

Alice Miller Energy Consultant September 28, 2011 Rate Design and Billing Systems Alice Miller Energy Consultant September 28, 2011 What is Rate Design? Principal goals of rate design Meet revenue requirement Equity among service classes Customer impacts

More information

General Information Series

General Information Series General Information Series 1 Agricultural Futures for the Beginner Describes various applications of futures contracts for those new to futures markets. Different trading examples for hedgers and speculators

More information

High Prices Show Stresses in New England Natural Gas Delivery System

High Prices Show Stresses in New England Natural Gas Delivery System February 7, 2014 High Prices Show Stresses in New England Natural Gas Delivery System Abstract. Since 2012, limited supply from the Canaport and Everett liquefied natural gas (LNG) terminals coupled with

More information

SMALL BUSINESS DEVELOPMENT CENTER RM. 032

SMALL BUSINESS DEVELOPMENT CENTER RM. 032 SMALL BUSINESS DEVELOPMENT CENTER RM. 032 FINANCING THROUGH COMMERCIAL BANKS Revised January, 2013 Adapted from: National Federation of Independent Business report Steps to Small Business Financing Jeffrey

More information

Farm Energy IQ. Energy Buying Options in Deregulated Markets 2/16/2015. Introductions. Deregulation of Energy Markets

Farm Energy IQ. Energy Buying Options in Deregulated Markets 2/16/2015. Introductions. Deregulation of Energy Markets Farm Energy IQ Farm Energy IQ Farms Today Securing Our Energy Future Energy Buying Options in Deregulated Markets Gary Musgrave, Penn State Extension Energy Buying Options in Deregulated Markets Introductions

More information

Derivatives: Risky Business or Effective Risk Management Tool?

Derivatives: Risky Business or Effective Risk Management Tool? Derivatives: Risky Business or Effective Risk Management Tool? Association of Corporate Counsel Dallas-Ft. Worth Chapter Dallas, TX April 21, 2011 Craig Enochs Paul Vrana What are derivatives? Overview

More information

A guide to. Using your prepayment meter

A guide to. Using your prepayment meter A guide to Using your prepayment meter Take control of your energy costs Our prepayment service lets you pay-as-you-go for gas and electricity so you can keep control of your energy use and costs. This

More information

NATURAL GAS PRICE VOLATILITY

NATURAL GAS PRICE VOLATILITY NATURAL GAS PRICE VOLATILITY I. Summary This brief white paper on natural gas prices is intended to discuss the potential for natural gas prices to be very volatile during the winter of 2003-04. Prices

More information

(Board Order 109/08) Effective September 1, 2008

(Board Order 109/08) Effective September 1, 2008 GUIDE TO THE PURCHASE OF NATURAL GAS IN MANITOBA As a Manitoba natural gas consumer, you have a choice when buying natural gas for your home or business. This guide provides information to help you select

More information

NERA Analysis of Energy Supplier Margins

NERA Analysis of Energy Supplier Margins 7 December 2009 NERA Analysis of Energy Supplier Margins By Graham Shuttleworth Even though wholesale energy prices have fallen recently, gas and electricity suppliers are earning very little margin on

More information

Financial Instruments Traded on the Commodity Exchange

Financial Instruments Traded on the Commodity Exchange Financial Instruments Traded on the Commodity Exchange Using the Financial Markets A cotton trader will almost always prefer to manage his price risk through physical positions and contracts for cotton,

More information

Reading: Chapter 19. 7. Swaps

Reading: Chapter 19. 7. Swaps Reading: Chapter 19 Chap. 19. Commodities and Financial Futures 1. The mechanics of investing in futures 2. Leverage 3. Hedging 4. The selection of commodity futures contracts 5. The pricing of futures

More information

Understanding Electricity Pricing

Understanding Electricity Pricing Understanding Electricity Pricing The First Step to Controlling Your Energy Costs Understanding Electricity Pricing 1 Introduction Electricity market competition provides businesses the opportunity to

More information

The UK Electricity Market Reform and the Capacity Market

The UK Electricity Market Reform and the Capacity Market The UK Electricity Market Reform and the Capacity Market Neil Bush, Head Energy Economist University Paris-Dauphine Tuesday 16 th April, 2013 Overview 1 Rationale for Electricity Market Reform 2 Why have

More information

Renewable Energy Certificates

Renewable Energy Certificates EPA s Green Power Partnership Renewable Energy Certificates Last updated: July 2008 U.S. Environmental Protection Agency 1200 Pennsylvania Ave, NW (Mail Code 6202J) Washington, DC 20460 www.epa.gov/greenpower

More information

PROFESSIONAL RETAIL STORE MAINTENANCE ASSOCIATION 1. Energy Sourcing BEST PRACTICES WHITE PAPER

PROFESSIONAL RETAIL STORE MAINTENANCE ASSOCIATION 1. Energy Sourcing BEST PRACTICES WHITE PAPER PROFESSIONAL RETAIL STORE MAINTENANCE ASSOCIATION 1 Energy Sourcing BEST PRACTICES WHITE PAPER ABOUT THE AUTHOR Adam Dench Adam Dench is a Senior Strategic Energy Advisor at Nania Energy. With seven years

More information

An Introduction to Natural Gas

An Introduction to Natural Gas An Introduction to Natural Gas NYMEX settlement prices since 1995 $12.00 $10.00 $ / MMBTU $8.00 $6.00 $4.00 $2.00 $0.00 95'Jan Jul 96'Jan Jul 97'Jan Jul 98'Jan Jul 99'Jan Jul 00'Jan Jul 01'Jan Jul 02'Jan

More information

How To Trade The Emni And Oil And Light Sweet Crude Oil

How To Trade The Emni And Oil And Light Sweet Crude Oil Day Trading the Emini S&P 500 (ES) and Light Sweet Crude Oil (CL) Live Trade Room with Carlos Diaz Disclaimer: The information in this guide is provided for your entertainment only. We cannot and do not

More information

ABOUT ELECTRICITY MARKETS. Power Markets and Trade in South Asia: Opportunities for Nepal

ABOUT ELECTRICITY MARKETS. Power Markets and Trade in South Asia: Opportunities for Nepal ABOUT ELECTRICITY MARKETS Power Markets and Trade in South Asia: Opportunities for Nepal February 14-15, 2011 Models can be classified based on different structural characteristics. Model 1 Model 2 Model

More information

COAL MARKET FREQUENTLY ASKED QUESTIONS

COAL MARKET FREQUENTLY ASKED QUESTIONS COAL MARKET FREQUENTLY ASKED QUESTIONS Over the course of the past decade, numerous issues have arisen in the U.S. coal trading arena. Bankruptcies, standardized trading contracts, and liquidity are a

More information

Different types of electricity markets modelled using PLEXOS Integrated Energy Model The UK Balancing Market example

Different types of electricity markets modelled using PLEXOS Integrated Energy Model The UK Balancing Market example Different types of electricity markets modelled using PLEXOS Integrated Energy Model The UK Balancing Market example Peny Panagiotakopoulou, Senior Power Systems Consultant, Energy Exemplar Europe Overview

More information

Deregulation: Removal or relaxation of regulations or controls governing a business or service operation such as utilities.

Deregulation: Removal or relaxation of regulations or controls governing a business or service operation such as utilities. Glossary Maryland Electric Basic Services: Services necessary for the physical delivery of service, including generation, transmission and distribution. The monthly customer charge and the temporary transition

More information

STATE OF NEW YORK PUBLIC SERVICE COMMISSION. At a session of the Public Service Commission held in the City of Albany on February 13, 2008

STATE OF NEW YORK PUBLIC SERVICE COMMISSION. At a session of the Public Service Commission held in the City of Albany on February 13, 2008 STATE OF NEW YORK PUBLIC SERVICE COMMISSION At a session of the Public Service Commission held in the City of Albany on February 13, 2008 COMMISSIONERS PRESENT: Garry A. Brown, Chairman Patricia L. Acampora

More information

How to Choose a Natural Gas Supplier

How to Choose a Natural Gas Supplier Choice. From groceries to gas stations to banks, you re used to having a wide range of choices when you go shopping. Now you can add natural gas to the list. That s right. Now you can choose where to buy

More information

Workshop B. 11:15 a.m. to 12:30 p.m.

Workshop B. 11:15 a.m. to 12:30 p.m. Workshop B Advanced Energy Management Tools: Benefitting from the Competitive Electricity Marketplace Beyond the Fixed Rate & Key Issues to Understand when Comparing Electricity Quotes 11:15 a.m. to 12:30

More information

Procurement Category: Energy. Energy Market Forces: Friend or Foe?

Procurement Category: Energy. Energy Market Forces: Friend or Foe? Procurement Category: Energy Energy Market Forces: Friend or Foe? As dynamic energy pricing becomes more prevalent in the industry, multi-site organizations are presented with new challenges, as well as

More information

Buy, Sell or Hold?: An Overview of Investing

Buy, Sell or Hold?: An Overview of Investing Buy, Sell or Hold?: An Overview of Investing LESSON 21: TEACHERS GUIDE Most of us take financial gambles every day. For example, we might hold off on purchasing a new video game or smart phone in hopes

More information

Ohio Energy. Workshop HH. Understanding & Managing Your Risks A Real Time Approach for Long-Term Power Purchases

Ohio Energy. Workshop HH. Understanding & Managing Your Risks A Real Time Approach for Long-Term Power Purchases Ohio Energy Workshop HH Understanding & Managing Your Risks A Real Time Approach for Long-Term Power Purchases Thursday, February 26, 2015 2 p.m. to 3:15 p.m. Biographical Information Dave Laipple, Regional

More information

Energy Market Investigation Statement of Issue

Energy Market Investigation Statement of Issue Which?, 2 Marylebone Road, London, NW1 4DF Date: 14th August To: Project Manager Energy Investigation Team, CMA Response by: Fiona Cochrane Project Manager Energy Market Investigation Competition and Markets

More information

Solar Power Cost Effects on Customers

Solar Power Cost Effects on Customers Austin s Solar Tool Box Value of Solar, Community Solar and Solar Leasing Kaiba White kaibawhite@gmail.com Value of Solar Tariff Value of solar (VoS) is available to residential customers for solar installations

More information

Spotlight Quiz. Financial Risk

Spotlight Quiz. Financial Risk Spotlight Quiz Financial Risk 1 Risk and Reward One of the first things that we learn in finance is that there is a relationship between risk and reward; if you want to earn high rewards you need to accept

More information

HOW TO IMPROVE CASH FLOW WITH INVOICE FINANCE. September 2015

HOW TO IMPROVE CASH FLOW WITH INVOICE FINANCE. September 2015 HOW TO IMPROVE CASH FLOW WITH INVOICE FINANCE September 2015 Contents 1. What is invoice finance? 2. What is The Invoice Market? 3. Why does it take large companies so long to pay invoices? 4. Invoice

More information

CHAPTER 22: FUTURES MARKETS

CHAPTER 22: FUTURES MARKETS CHAPTER 22: FUTURES MARKETS 1. a. The closing price for the spot index was 1329.78. The dollar value of stocks is thus $250 1329.78 = $332,445. The closing futures price for the March contract was 1364.00,

More information

NATURAL GAS PRICES TO REMAIN AT HIGHER LEVELS

NATURAL GAS PRICES TO REMAIN AT HIGHER LEVELS I. Summary NATURAL GAS PRICES TO REMAIN AT HIGHER LEVELS This brief white paper on natural gas prices is intended to discuss the continued and sustained level of natural gas prices at overall higher levels.

More information

10 Myths and Realities of Natural Gas and Electricity Purchasing

10 Myths and Realities of Natural Gas and Electricity Purchasing 6 Strategic Planning for Energy and the Environment 10 Myths and Realities of Natural Gas and Electricity Purchasing Craig Schultz, President Energy Buying Strategies, Inc. ABSTRACT In deregulated natural

More information

Johns Hopkins SAIS seminar - November 12, 2013

Johns Hopkins SAIS seminar - November 12, 2013 How Rooftop Solar Is Changing The Business of Electric Utilities Johns Hopkins SAIS seminar - November 12, 2013 Bob Gibson, VP, Education and Outreach, SEPA About SEPA SEPA is an educational non-profit

More information

What is hourly pricing and what does it mean for you? Customer Meetings May 2006

What is hourly pricing and what does it mean for you? Customer Meetings May 2006 What is hourly pricing and what does it mean for you? Customer Meetings May 2006 Catherine McDonough Project Manager 1 (315) 428-5641 Background In 1998, National Grid (NG) extended hourly pricing to our

More information

FACT SHEET. NEM fast facts:

FACT SHEET. NEM fast facts: (NEM) operates on one of the world s longest interconnected power systems, stretching from Port Douglas in Queensland to Port Lincoln in South Australia and across the Bass Strait to Tasmania a distance

More information

Residential Heating Oil Prices: What Consumers Should know

Residential Heating Oil Prices: What Consumers Should know Residential Heating Oil Prices: What Consumers Should know Introduction Heating oil is a petroleum product used by many Americans to heat their homes. Historically, heating oil prices have fluctuated from

More information

Competitive Electricity Prices: An Update 1

Competitive Electricity Prices: An Update 1 Competitive Electricity Prices: An Update by J. Alan Beamon Throughout the country, States are moving to make their electricity generation markets more competitive. Although the timing will surely vary,

More information

Use Your Power To Choose. A PSC Guide

Use Your Power To Choose. A PSC Guide Use Your Power To Choose A PSC Guide Message from the Chairwoman Dear energy consumers... 1 electricity In New York s competitive energy market, you can choose your supplier of electricity and natural

More information

OCTOBER 20, 2005 WASHINGTON, D.C.

OCTOBER 20, 2005 WASHINGTON, D.C. REMARKS FOR WILLIAM M. FLYNN CHAIRMAN NEW YORK STATE PUBLIC SERVICE COMMISSION PRESENTATION TO: FEDERAL ENERGY REGULATORY COMMISSION OPEN MEETING OCTOBER 20, 2005 WASHINGTON, D.C. Good morning, Chairman

More information

How to Assess Your Financial Planning and Loan Proposals By BizMove Management Training Institute

How to Assess Your Financial Planning and Loan Proposals By BizMove Management Training Institute How to Assess Your Financial Planning and Loan Proposals By BizMove Management Training Institute Other free books by BizMove that may interest you: Free starting a business books Free management skills

More information

19. Interest Rate Swaps

19. Interest Rate Swaps 19. Interest Rate Swaps Reading: Stigum 19 on Swaps. See also Hull who builds from the idea (mentioned in Stigum) that swaps are like a portfolio of forward contracts. Daily Financial Times includes bid-ask

More information

Energy Management. Electric Procurement Strategies. August 27, 2007

Energy Management. Electric Procurement Strategies. August 27, 2007 Energy Management Electric Procurement Strategies August 27, 2007 1 Presentation Outline Purpose Background City of Dallas procurement goals Procurement term Environmental goals Energy products Energy

More information

Managing Feed and Milk Price Risk: Futures Markets and Insurance Alternatives

Managing Feed and Milk Price Risk: Futures Markets and Insurance Alternatives Managing Feed and Milk Price Risk: Futures Markets and Insurance Alternatives Dillon M. Feuz Department of Applied Economics Utah State University 3530 Old Main Hill Logan, UT 84322-3530 435-797-2296 dillon.feuz@usu.edu

More information

Working with your banker

Working with your banker Working with your banker Business CoaCH series How the system works What your bank expects of you How to maintain a banker-friendly relationship Business Coach series Getting support when you need it The

More information

City Council Briefing. June 16, 2010

City Council Briefing. June 16, 2010 City Council Briefing June 16, 2010 1 Review the City s electricity procurement program and upcoming contract for the period beginning January 1, 2011. How we buy electricity How well we did on our last

More information

Chapter 16: Financial Risk Management

Chapter 16: Financial Risk Management Chapter 16: Financial Risk Management Introduction Overview of Financial Risk Management in Treasury Interest Rate Risk Foreign Exchange (FX) Risk Commodity Price Risk Managing Financial Risk The Benefits

More information

Forwards and Futures

Forwards and Futures Prof. Alex Shapiro Lecture Notes 16 Forwards and Futures I. Readings and Suggested Practice Problems II. Forward Contracts III. Futures Contracts IV. Forward-Spot Parity V. Stock Index Forward-Spot Parity

More information

GUIDE PURCHASING NATURAL GAS IN MANITOBA

GUIDE PURCHASING NATURAL GAS IN MANITOBA UNDERSTANDING YOUR NATURAL GAS SUPPLY As a Manitoba natural gas consumer, you have a choice when buying natural gas for your home or business. This guide provides information to help you understand your

More information

Western Australia and the Northern Territory are not connected to the NEM, primarily due to the distance between networks.

Western Australia and the Northern Territory are not connected to the NEM, primarily due to the distance between networks. Australia has one of the world s longest alternating current (AC) systems, stretching from Port Douglas in Queensland to Port Lincoln in South Australia and across the Bass Strait to Tasmania a distance

More information

INTRODUCTION TO OPTIONS MARKETS QUESTIONS

INTRODUCTION TO OPTIONS MARKETS QUESTIONS INTRODUCTION TO OPTIONS MARKETS QUESTIONS 1. What is the difference between a put option and a call option? 2. What is the difference between an American option and a European option? 3. Why does an option

More information

Options on Beans For People Who Don t Know Beans About Options

Options on Beans For People Who Don t Know Beans About Options Options on Beans For People Who Don t Know Beans About Options Remember when things were simple? When a call was something you got when you were in the bathtub? When premium was what you put in your car?

More information

How to Save on Your Electricity Rate

How to Save on Your Electricity Rate Richard G Lubinski From: Sent: To: Subject: Buildings [esubscriptions@buildings.com] Wednesday, October 21, 2009 1:35 PM rick@think-energy.net How to Save on Your Electricity Rate Having trouble viewing

More information

Kevin Spears Electricity Regulation and Rate Structures 12 4 12 ECO 300

Kevin Spears Electricity Regulation and Rate Structures 12 4 12 ECO 300 Kevin Spears Electricity Regulation and Rate Structures 12 4 12 ECO 300 Introduction Public utilities are a necessity for all households. Regulation of these utilities is also a necessity to ensure that

More information

Single Electricity Market (SEM) and interaction with EMIR. Central Bank of Ireland

Single Electricity Market (SEM) and interaction with EMIR. Central Bank of Ireland Single Electricity Market (SEM) and interaction with EMIR Central Bank of Ireland 11 th July 2014 About EAI Overview of SEM and its Participants The market is a gross mandatory pool and consists of generators

More information

Reading Gaps in Charts to Find Good Trades

Reading Gaps in Charts to Find Good Trades Reading Gaps in Charts to Find Good Trades One of the most rewarding and challenging things I have done in my 40-year trading career is teach elementary school students the basics of technical analysis

More information

Electricity Market Reform - How government electricity market reform could impact supply companies

Electricity Market Reform - How government electricity market reform could impact supply companies Electricity Market Reform - How government electricity market reform could impact supply companies Robert Groves Chief Executive Officer SmartestEnergy Limited Suppliers Forum, London 12 th October 2011

More information

The main points are: The Business Plan How To Write It. History of your Business

The main points are: The Business Plan How To Write It. History of your Business The Business Plan How To Write It A business plan has nine key sections. Within each of the following sections there is a list of points that should be covered fully backed up with detailed information

More information

Disclaimer: All costs contained within this report are indicative and based on latest market information. 16 th March 2015

Disclaimer: All costs contained within this report are indicative and based on latest market information. 16 th March 2015 Disclaimer: All costs contained within this report are indicative and based on latest market information 16 th March 2015 FD SUMMARY The make up of the electricity bill is changing, with non-commodity

More information

Most household services provide you with a fixed monthly bill: Broadband Internet service

Most household services provide you with a fixed monthly bill: Broadband Internet service Predict-a-Bill Natural Gas Most household services provide you with a fixed monthly bill: Cell phone service Broadband Internet service And now... your natural gas supply! Predict-a-Bill advantage: Developed

More information

The Power Market: E-Commerce for All Electricity Products By Edward G. Cazalet, Ph.D., and Ralph D. Samuelson, Ph.D.

The Power Market: E-Commerce for All Electricity Products By Edward G. Cazalet, Ph.D., and Ralph D. Samuelson, Ph.D. The Power Market: E-Commerce for All Electricity Products By Edward G. Cazalet, Ph.D., and Ralph D. Samuelson, Ph.D. Why not use the Web to buy and sell transmission rights at prices derived from bids

More information

Impact of Big Data Analysis on Strategic Business Planning for Liquid Natural Gas (LNG) and Methanol Pricing in Commodity Markets

Impact of Big Data Analysis on Strategic Business Planning for Liquid Natural Gas (LNG) and Methanol Pricing in Commodity Markets Impact of Big Data Analysis on Strategic Business Planning for Liquid Natural Gas (LNG) and Methanol Pricing in Commodity Markets By Merv Perry MBA MSc CISSP CISM Big data is fundamentally changing the

More information

Customer Bill Impacts of Generation Sources in Ontario. Canadian Wind Energy Association

Customer Bill Impacts of Generation Sources in Ontario. Canadian Wind Energy Association Customer Bill Impacts of Generation Sources in Ontario Prepared for: Canadian Wind Energy Association February 15, 2013 poweradvisoryllc.com 978 369-2465 Table of Contents Executive Summary... i 1. Introduction

More information

Selecting sources of finance for business

Selecting sources of finance for business Selecting sources of finance for business by Steve Jay 08 Sep 2003 This article considers the practical issues facing a business when selecting appropriate sources of finance. It does not consider the

More information

GUIDE TO MOVING. We can give you a breakdown of the costs involved

GUIDE TO MOVING. We can give you a breakdown of the costs involved GUIDE TO MOVING "I'll never do this again!" So many people say this at some stage when they are buying and selling a house that we have prepared this guide to assist you. It outlines how the transaction

More information

Commodity Options as Price Insurance for Cattlemen

Commodity Options as Price Insurance for Cattlemen Managing for Today s Cattle Market and Beyond Commodity Options as Price Insurance for Cattlemen By John C. McKissick, The University of Georgia Most cattlemen are familiar with insurance, insuring their

More information

Indiana Utility Regulatory Commission. Natural Gas Forum October 16, 2007

Indiana Utility Regulatory Commission. Natural Gas Forum October 16, 2007 Indiana Utility Regulatory Commission Natural Gas Forum October 16, 2007 1 Today s Objectives Gas Supply Natural Gas Issues Energy efficiency Usage reduction continues Emerging Issues Forecast for Winter

More information

Industry Informational Report. Exchange for Physicals (EFP)

Industry Informational Report. Exchange for Physicals (EFP) Industry Informational Report Exchange for Physicals (EFP) Background information on transaction structure, industry practice and applications prepared by RISK LIMITED CORPORATION All information contained

More information

ELECTRICITY SECTOR 1

ELECTRICITY SECTOR 1 ELECTRICITY SECTOR 1 Some Insights from New Zealand and Australian Experiences Infratil has deep operational experience in electricity in New Zealand and Australia - also in the CEOs of the businesses

More information

Council measure seeks changes to allow energy competition and savings

Council measure seeks changes to allow energy competition and savings May 1, 2014 Ald. Robert Bauman (414) 286-2221 Council measure seeks changes to allow energy competition and savings Alderman Robert J. Bauman has introduced a resolution that seeks to change state law

More information

Creating more Value out of Storage

Creating more Value out of Storage Creating more Value out of Storage By Gary Howorth, Founder Energy-Redefined Introduction Gas Storage is a complicated business which carries with it large risks and potentially low rewards. Assets can

More information

CONTRACTS FOR DIFFERENCE

CONTRACTS FOR DIFFERENCE CONTRACTS FOR DIFFERENCE Contracts for Difference (CFD s) were originally developed in the early 1990s in London by UBS WARBURG. Based on equity swaps, they had the benefit of being traded on margin. They

More information

Continental Breakfast Sponsor

Continental Breakfast Sponsor Continental Breakfast Sponsor Providing electricity for businesses and institutions nationwide Industry Leadership We re a leader in the electricity business, and our parent company, GDF SUEZ, is the No.

More information

Energy Products. Seasonality and Storage in Natural Gas. Resource Guide

Energy Products. Seasonality and Storage in Natural Gas. Resource Guide Energy Products Seasonality and Storage in Natural Gas Resource Guide The storage industry continues to evolve both in capability and it s prominence within the delivery chain. What once was a seasonal

More information

3/11/2015. Crude Oil Price Risk Management. Crude Oil Price Risk Management. Crude Oil Price Risk Management. Outline

3/11/2015. Crude Oil Price Risk Management. Crude Oil Price Risk Management. Crude Oil Price Risk Management. Outline 1 Phoenix Energy Marketing Consultants Inc. 2 Outline What is crude oil price risk management? Why manage crude oil price risk? How do companies manage crude oil price risk? What types of deals do companies

More information

Looking for an Energy Broker? 5 Questions to Ask

Looking for an Energy Broker? 5 Questions to Ask Looking for an Energy Broker? 5 Questions to Ask Ask the right questions to get the right deal 01 Looking for a Business Energy Broker? 5 Questions to Ask Ask the right questions to get the right deal

More information

ERRORS & OMISSIONS WEBINAR. John L. Mondics President, Mondics Insurance Group, Inc. April 30, 2014

ERRORS & OMISSIONS WEBINAR. John L. Mondics President, Mondics Insurance Group, Inc. April 30, 2014 ERRORS & OMISSIONS WEBINAR John L. Mondics President, Mondics Insurance Group, Inc. April 30, 2014 WHY PURCHASE ERRORS AND OMISSIONS INSURANCE? The days of caveat emptor or buyer beware are gone Real estate

More information

Disclosure of Customer Rights and Company Policies

Disclosure of Customer Rights and Company Policies May 8, 2013 Disclosure of Customer Rights and Company Policies Qualifications The Company operates in the State of New Jersey (depending upon geographic area) under the name AmeriGas Propane ( AmeriGas

More information

Overview. 4: Contracts. Section: content for the worker and resources Key messages A: Introducing contracts ff

Overview. 4: Contracts. Section: content for the worker and resources Key messages A: Introducing contracts ff Overview 4: Contracts This topic is about contracts. It includes what a contract is and what the dierent types of contracts are. It talks about signing written contracts and entering into oral contracts.

More information

Solar Power Frequently Asked Questions

Solar Power Frequently Asked Questions General information about solar power 1. How do I get solar power? Solar Power Frequently Asked Questions Many companies install solar power systems including some electricity retailers. It is worth comparing

More information

SPECIAL UPDATE. A New Power Market in Mexico. A Competitive Power Market. Wholesale Market Participants

SPECIAL UPDATE. A New Power Market in Mexico. A Competitive Power Market. Wholesale Market Participants SPECIAL UPDATE A New Power Market in Mexico by Raquel Bierzwinsky, in New York and Mexico City, and David Jiménez and Javier Félix, in Mexico City Mexico has enacted secondary legislation that creates

More information

Use Your Power To Choose. A PSC Guide

Use Your Power To Choose. A PSC Guide Use Your Power To Choose A PSC Guide Message from the Chairman Dear energy consumers... 1 electricity In New York s competitive energy market,you can choose your supplier of electricity and natural gas

More information

Introduction to Equity Derivatives on Nasdaq Dubai NOT TO BE DISTRIUTED TO THIRD PARTIES WITHOUT NASDAQ DUBAI S WRITTEN CONSENT

Introduction to Equity Derivatives on Nasdaq Dubai NOT TO BE DISTRIUTED TO THIRD PARTIES WITHOUT NASDAQ DUBAI S WRITTEN CONSENT Introduction to Equity Derivatives on Nasdaq Dubai NOT TO BE DISTRIUTED TO THIRD PARTIES WITHOUT NASDAQ DUBAI S WRITTEN CONSENT CONTENTS An Exchange with Credentials (Page 3) Introduction to Derivatives»

More information

The Nordic Electricity Exchange and The Nordic Model for a Liberalized Electricity Market

The Nordic Electricity Exchange and The Nordic Model for a Liberalized Electricity Market The Nordic Electricity Exchange and The Nordic Model for a Liberalized Electricity Market 1 The market When the electricity market is liberalized, electricity becomes a commodity like, for instance, grain

More information