Index
Description:
- With index price option, businesses pay the varying market price of electricity for each given hour. Index price products (also referred to as market-based products) provided supply at a rate that is linked to a transparent, published index (day-ahead or real-time).
- An index price product may provide greater flexibility to take advantage of short-term market opportunities until the timing and market conditions are more advantageous to lock in on a long-term contract with a fixed all-in or energy only product.
- Index price hourly fluctuation does provide businesses with the flexibility to adjust their usage to take advantage of market dips. For example, manufacturers can opt to use more electricity at off-peak hours (overnight).
- This product is subject to market volatility and can be unpredictable, we consider index to be a high-risk product.
- If budget certainty is your top priority, an index price product is not typically recommended as a long-term strategy because of the risk of price volatility. However, it can be a good alternative bridge position to wait out a period of high or rising market conditions. Index price product is generally used by businesses that want to ride the market for some period of time to assess future market conditions or opportunities.
- Since the customer is basically absorbing all the risk that the price will fluctuate, there is not variable load cost associated with this option. This hourly fluctuation can make it difficult for some businesses to accurately manage their cost as it relates to the quantity that needs to be consuming for that particular hour.
- A business can execute a product conversion moving them from index to fixed all-in at any time during the contract.
