Insights
Price management Insights
Larger Electricity Consumers Better Off Outside the Regulated Price Plan
January 2009
Larger electricity consumers should be happy they will no longer be eligible for the Regulated Price Plan as of May 1, 2009. Their cost of electricity will come down and their risk will be no higher than if they were still on the RPP. Read more >>
When Is It a Good Time to Hedge?
November 2008
Hedging is a risk management tool that produces a desired outcome with a high degree of predictability. Any time is suitable for risk management. Read more >>
A Market Timing Strategy Won't Minimize Price
November 2008
"When it drops to $7.00, then I'll lock in." This market timing strategy neither minimizes price nor controls risk. There is a different strategy that works better. Read more >>
Develop a "SMART" Goal for Your Energy Procurement Plan
October 2008
Commodity markets tend to bring out the competitive nature in people. Everyone wants to "beat" the market and the rush of doing so can be addictive, more addictive than the pain of losing to the market. But when a speculative position is taken the likelihood of either outcome is about the same. Developing a "SMART" goal is a critical first step in an energy procurement plan. Read more >>
What is the Cost of Managing Energy Price Risk?
October 2008
We often say that cost reduction and risk reduction are at opposite ends of a spectrum when it comes to energy buying. This implies that risk reduction costs something. Is this true? What is the cost of energy price risk managment? Read more >>
Don't Get Harpooned in a Retail Power Deal
September 2008
In the broad sales world, a "whale" is a customer that yields a high commission or margin. It follows then that one way for buyers (of anything) to minimize costs is to avoid getting harpooned. How can you avoid getting "harpooned" by an electricity retailer? Read more >>
Ontario's Near-Term Electricity Shelf Well-Stocked
September 2008
The supply-demand picture for electricity is a key consideration for those thinking about hedging their future price for power. For 2009, the Ontario picture is much more favourable than it has been in the past. Read more >>
Contracting Wisely for T1 Can Reduce Costs
September 2008
The T1 semi-unbundled service offered by Union Gas provides larger gas users with the chance to reduce costs on distribution, but only if they contract wisely. Customers too often "over-contract" for T1 and miss a chance to reduce their costs. Read more >>
Managing Cost and Risk with a Supplier Portfolio
August 2008
For commodities such as natural gas a strong relationship with a single supplier doesn't lead to improvements in cost or quality. In the worst case, using a single natural gas supplier can create financial risk. Read more >>
Do Real Interest Rates Influence Commodity Prices?
July 2008
With rising commodity prices come theories of what causes the price increase. A common theory is that a decline in real interest rates (interest rates adjusted for inflation) will prompt investors to forego bonds and invest in commodities, resulting in higher demand for these products and thus, higher prices. To better understand the role that interest rates, and more specifically investors, have on energy prices... Read more >>