As a business owner you should ask your self these two questions:
Does the cost of NG affect my business bottom line?
The answer to this question is not a simple "Yes or No", if your business is currently under an energy supply contract and it does not expire within the next 12 to 24 moths, then the current cost of NG would not affect your bottom line, depending on the type of business you run, of course.
However, if you are looking to shop for an energy supply contract within the next 12 to 24 months, then the answer is a definite big fat "YES", the current cost of NG will affect your business bottom line.
How is that possible?
Well, the energy supply contracts are backed by many variables, Natural Gas being one of the main ones.
How can my business benefit from it?
I would love to say use a USEC Broker to negotiate your next Energy Supply Contract, but that would be unfair to the competition :).
Our advice is for your business to take advantage of the dips in the NG market, when the market dips as it currently has, lock in to the longest term you could possibly negotiate with a supplier.
Texas Business Owners, please pay very close attention.
Product Offered - If your Broker is not currently (I do mean currently) advising your business to get in to a "Fixed Price" product, FIRE THEM IMMEDIATELY. There is no good logical reason for a business to go in to an "Index Price" product with the market conditions being what they are today.
For example, in the last 4-6 months USEC participated in negotiating and securing Energy Supply Contracts for both C&I (Large Commercial & Industrial) and SMB (Small Business) customers, with the offered Fixed Price product for 60 month Term being in the low 3's and 4's depending on their size and load factor.
Again, do not let a Broker or a Consultant to insult your intelligence, if they are pushing you in to an Index Price product with a $.03 cent adder, do not hesitate and kick them out of your business. There is no good logical reason for your business to be on an Index product with a $.03 cent adder when you can lock your business in-to $.03 Fixed All-in product.
Term Offered - if your current Broker is only bringing short terms to the table, such as 12 - 24 months, FIRE THEM IMMEDIATELY. With the historically low NG prices, your business should consider the longest Fixed Price Term possible, I do mean 5 years or longer.
Imagine if you could go back 5 years and lock your business in to a Fixed All-in product at $.035 would you do it? Of course you would, today is no different.
There are many products available in the current Deregulated Energy markets, not every product is a fits all. Here at USEC we have seen everything from a Fixed All-in to Heat to Portfolio products, business owners who are educated by their brokers can make the right decision for the business. The only way to truly know if you are in good hands is to get a second opinion from time to time.
"With today's NG market conditions, there is no good logical reason for a customer to lock in to a short term contract, unless they have a crappy Broker."
by: Mikhail Skachko