Natural gas buy-sell options important to consider
August 22, 2012 By Treena Hein
If you’re a regular Energy Edge reader, you know that managing energy is an ongoing process. “Those who look at their energy issues only once a year are typically paying 5 to 25 per cent more than they need to,” says 360 Energy’s Lisa Brodeur.
“Growers who purchase directly should be forecasting monthly usage and comparing and reviewing their monthly variance of usage to what was contracted. The difference between contract and delivery and the actions that can be taken to mitigate this can impact annual energy costs by 2 to 10 per cent.”
For direct purchase consumers, Brodeur says the same quantity of gas is delivered on a daily basis regardless of the time of year (depending on your utility, this is often classified as your Mean Daily Volume, MDV, or Daily Contract Quantity, DCQ). “Based on yearly forecasts, the amount delivered should be equal to what has been consumed by the end of your utility contract,” she says.
“More gas is typically consumed in the winter months, and this discrepancy should be looked at on a monthly basis to ensure the account doesn’t deviate too far away from your expectations.”
“If it does, there are a number of buying/selling options you can look into, each with its own set of advantages and disadvantages. This is called load balancing. This year, with a very warm winter, many operations have under-consumed and most will be looking to sell their unused portion of deliveries.”
Your energy supplier or consultant should be keeping you apprised of your options, in particular at this time of year as you approach both checkpoint balancing and contract year end.
Natural gas buy/sell options (load balancing)
1) You can sell your gas to another greenhouse or end-user or supplier. If you employ an energy consultant, they can do all of the leg-work for you by finding another end-user in an opposite position, negotiating the price, finalizing the paperwork, and sending/receiving the funds.
2) Along similar lines, you can sell your gas to other energy consultants, suspend your deliveries to the utility, or sell it back to your supplier.
3) The final option, which at times of high volatility can be a good solution, is to sell gas back to your utility. This sort of transaction was particularly popular after hurricanes Katrina and Rita blew through the Gulf of Mexico and disrupted gas supply. Selling gas back to the utility two months after the hurricanes (if you were fortunate enough to have been in that position) was of significant value and you would have beaten the market price at the time.
“For those of you in the Union Gas franchise, there are additional balancing requirements in September and February. September checkpoint balancing requires that anyone who’s actual consumption is less than their deliveries and does not exceed their checkpoint amount determined by Union Gas, they must sell off their unused gas in order to bring their balance closer to zero. If you are in a position to purchase gas in the Union franchise, this is a great time to do so.”
“Evaluating these options takes time, but can be worth it to avoid costly utility fees at the end of your contract,” Brodeur asserts. “By addressing your account monthly and proactively taking steps to mitigate any imbalance, you will provide yourself with more options than if you wait until the end of your contract period.”
“As you come closer to contract expiry, many of your options begin to disappear, along with the ability to choose what makes the best business sense for your organization.” For more information and assistance with load balancing, contact 360 Energy at firstname.lastname@example.org
Lisa Brodeur is a Quality Assurance Supervisor at 360 Energy.
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