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Risk Management Insights

Hedging: There's a Better Way than Market Timing

May 2013

The problem with market timing as a hedging philosophy is that time is never clear except in hindsight and there is a cost for being wrong, whether the energy buyer is too soon or too late. There is a better way. Read more >>

Energy Buyers Benefit from Competition among Suppliers

May 2013

Many energy buyers do not structure their buying process to take advantage of competitive forces. But a supplier portfolio of three or more parties delivers cost savings - consistently. Read more >>

Price Risk a Key Element in Balancing Natural Gas Supply

October 2011

What doesn't get discussed often in organizations is the price risk associated with the disposal of purchased natural gas that is not needed, or the purchase of additional gas should the organization consume more than projected - and yet, it can have a budget impact. Read more >>

System Gas as a Source of Supply for Larger Consumers

October 2011

The price for system supply from Enbridge and Union has been relatively low and stable for the last while, leading larger natural gas consumers to ask whether system supply is a viable alternative for them. Read more >>

Combined Heat and Power Projects: An Opportunity But Know the Risks

February 2011

The Ontario Power Authority is developing a Combined Heat and Power Standard Offer Program to elicit new projects up to 20 MW in capacity in certain areas of the province. The program will offer projects a standard contract with the OPA, designed to mitigate the risks developers face. The program is an opportunity worth evaluating for organizations with an available thermal load, but the opportunity is not risk-free. Read more >>

Buying Expertise by RFP: Recipe for Problems

February 2011

The procurement policies of many public buyers require that a formal "Request for Proposals" process be used to procure professional services above a certain spend threshold. But the standard RFP can become a Recipe For Problems. Buyers may end up missing out on new ideas and novel solutions that can better meet their needs. Read more >>

Hurricanes and Hedging - Price Risk Management in Action

September 2010

Commodity price risk management costs money and raises questions about how likely it is that things will go wrong and how bad it will be if they do. The annual hurricane season is one phenomenon that can be used to illustrate price risk management in action. Read more >>

How Does Having a Portfolio of Suppliers Save Money?

August 2010

Attempting to reduce energy costs by buying at the "bottom of the market" cannot guarantee consistent savings against market prices. However, having a portfolio of suppliers can guarantee that a buyer will receive competitive pricing and in many cases, demonstrated savings. Read more >>

Unintended Consequences: The Impact of Overhedging

June 2010

Many organizations that use commodities in their operations employ hedging to control the risk of fluctuating commodity prices. But what if you noticed that your commodity costs, net the cost of your hedge, were going up while the market price of your commodity was going down? This is a sign you may be overhedged. Read more >>

Hurricanes and Natural Gas Prices: The Link

May 2010

The production of natural gas may be disrupted by hurricanes that damage or shut down offshore rigs in the Gulf of Mexico. Just expected hurricane activity can exert a noticeable effect on prices long before the hurricanes even form. Read more >>