Power and gas markets can behave unpredictably, and energy supply contracts can be structured in many different ways. Coupled, these facts present a risk and an opportunity when negotiating your supply contracts. Through SourceOne’s depth of experience, we have developed proprietary hedging strategies and a methodical approach to structuring supply contracts that maximizes commercial benefits while mitigating market risks based on customer requirements.
SourceOne specializes in designing tailored hedging approaches to fit our customer’s needs. As appropriate, we use a variety of physical and financial products to fix the price for all or part of an energy purchase, take advantage of index prices, set price caps or collars, or trade downside opportunity for reduced prices.
MANAGING RISK AND MARKET VOLATILITY
For large energy consumers, the inherent volatility in global and regional energy markets can result in significant fluctuations in bottom-line earnings. This uncertainty makes it difficult to accurately forecast financial performance, create realistic budgets, set investor expectations or allocate capital over the short- and long-term.
Using internally developed models, SourceOne can forecast your energy costs based on current market expectations. We use Monte-Carlo simulations to quantify the potential for fluctuations in cost and earnings. This helps customers understand, in dollar terms, cash flow at risk to energy-related volatility. We use this analysis to develop an optimal hedging strategy that meets your appetite for risk and cash flow requirements.
UNDERSTANDING MARKET DYNAMICS
SourceOne’s market advisory services are informed by fundamental and technical analysis of natural gas and power forward markets. Through subscriptions to real time data services for forward market trading and settlements, we are able to pull forward continuation curves for all delivery hubs for power and natural gas throughout North America. With this information, SourceOne energy analysts are able to stress test our energy forecasts to quantify high and low settlement of forward pricing within a defined confidence interval. This acts as a direct input into hedging strategies for large clients.
Our energy desk also has a strong understanding of local regulations, market structures and utility tariffs. In certain locations and scenarios, your regulated utility may offer the best option for procuring power and gas. We regularly review regulatory rate filings for pending utility tariff changes and explain to our customers the potential implications on their energy bills.
FINANCIAL FIRM ENERGY DATA MANAGEMENT
The world’s leading source of intelligent information for businesses and professionals saves $400,000 in annual energy costs by leveraging SourceOne's strategic commodity support and online energy management system.