In a deregulated market, wholesale power can be purchased in three ways:
Customers who value stability and simplicity in managing their electricity supply would choose fixed or secured electricity procurements. Achieving clarity into monthly spending and avoiding volatility risks is a priority for many customers. A fixed price covers all of the customers’ usage so they aren’t exposed to market price changes; they pay one fixed price per kilowatt-hour (kWh) for all of their electricity usages. Customers will have to make a one-time decision, accept one price, and one simple bill.
Flexible Index Purchases
Several factors will affect both volatility and opportunity risk for purchasing power. It is important to find a strategy to balance risks and achieve budget certainty amidst an unpredictable environment.
A fixed price may only achieve budget certainty in the short-term. By thinking and acting long-term, customer can have the security of a fixed price and the flexibility to respond to market conditions over time. Percentages of the load may be purchased at regular intervals over a longer time horizon to smooth the curve and manage to the mean.
Index Plus Block Purchases
Energy markets are volatile, but customer usage patterns may be consistent. While a fixed price strategy feels secure, it often feels like opportunities are missed. For customers with the flexibility and a level of risk tolerance to take a more strategic approach with the power purchasing strategy, a blended solution may achieve their goals.
Index Plus Block Purchase allows customers to fix a portion of their loads to mitigate volatility risk while allowing them to benefit from low prices.
Regardless of the procurement mechanism selected by our clients, TEG is positioned to support their procurement objectives and provide additional services including:
- Ongoing energy procurement strategy
- Contract performance tracking and accounting reconciliation
- Data analysis and reporting
- Analysis of renewable dispatch scenarios into wholesale/retail markets and their impacts on energy trading hubs, contract prices, and zonal LMPs
- Analysis of transmission constraints and congestion patterns and their impacts on zonal LMPs and contract prices
- Analysis of competing generation and transmission lines and their impacts on zonal LMPs and contract prices
- Complete supply and demand analysis and current market conditions for market participants
- Analysis of the existing contract with respect to rate adjustments, facility charges, termination liabilities, connection charges, contract terms/conditions, and negotiation strategies before signing a new contract
We also provide physical and financial (P&F) power trading assistances including ISO/Inter-ISO power trading (real-time & forward), bilateral trading, power/natural gas trading on ICE & Nodal Exchange, power/natural gas trading on NYMEX and Congestion/ARR/FTR trading.