There are two major differences between natural gas and electricity pricing and contracts. Natural gas has an established and published price per volumetric unit and contract prices are usually tied to the NYMEX or to regional indexes. Electricity does not have a public, open market for its prices. Furthermore, electricity is traded in blocks of KW, rather than the volumetric unit of KwH. The conversion from KW to KwH is an art rather than a science and includes risk assessment. It is therefore individually priced per building, and prices will vary between different suppliers, as each one tends to asses a different level of risk to the same building.
The price situation is further clouded by the fact the electricity charges include various components such as capacity, transmission, line loss and ancillary. A supplier quote may include all, some or none of these components. Furthermore contract clauses defining certain risk factors will also affect the price. Customers requesting quotes from various suppliers - without being aware of all the components and associated contractual clauses - will most likely make the wrong choice.
Because of the way electricity is traded, many suppliers will not allow any layered hedges. Or they will severely restrict the amount of hedges and impose minimums per hedge. At PRI we make sure that your price quotes are comparable, and that our approved suppliers are capable and agreeable to provide maximum flexibility in hedging, allowing you to reduce risk and take advantage of market volatility.
Contact us to find out if you can enjoy the benefits of the deregulated electricity market.