Rather than trying to outsmart a very volatile energy market like a gambler, making many small purchases respects the realities of the market and drastically reduces risks. It is the age-old solution of dollar-cost-averaging. It doesn’t put all your eggs in one basket. Prospect Resources calls it multi-step or layered hedging.
Layered Hedging turns purchasing energy into a process, not a one-shot activity. It requires day-to-day management of each account and continuous monitoring of the client’s strategic goals. It avoids last minute decisions. It prevents being forced into harmful purchase situations. Because the strategy requires multiple small purchases over time, layered hedging tends to take a long term view of purchasing energy.
Layered Hedging requires a detailed understanding of the market, a big dose of humility and the knowledge that you do not have a crystal ball. It requires a lot of hard work and constant diligence. It requires thinking long-term, not short-term. It requires a customized strategy that is time-intensive. Whereas the work of consultants and suppliers is done once a fixed-price contract is in place, the layered hedging work of Prospect Resources is just beginning.
Strategic Layered Hedging has provided Prospect Resources clients with a 60+% reduction in price volatility, price stability in an extremely volatile market and an average savings of more than 15% as compared to the utility prices or to fixing 100% of requirements at once.