Price Protection Plans
Did you know?
Every Canadian produces at least five tonnes of greenhouse gases directly each year and this number is steadily increasing.
Canada produces a total of 747 million tonnes of carbon dioxide equivalent (CO2eq) annually.
A Price Protection Plan allows you to purchase natural gas and electricity for a guaranteed fixed rate that is locked in for a period of up to five years. This protects you from the volatility of the energy markets that can rapidly fluctuate. With the security of a fixed energy rate, you can more effectively budget over the long-term for you energy needs.
A fixed rate price protection plan is similar to a fixed rate mortgage plan where you have the option to lock in at a specific interest rate for a period of years. Similarly with mortgage rates, the secret is to lock in your natural gas rate when prices are low.
We have information on current market prices and long-term trends in the natural gas market.
Main Advantages of Fixed Rates:
- Peace of mind knowing that the price you pay for natural gas will not increase for the period of your fixed rate contract.
- Potential for cost savings when prices rise above your fixed rate, as you will continue to pay the rate you locked in with natural gas supplier.
- The ability to budget your natural gas costs over the long-term, rather than having to adjust your budget for monthly cost fluctuations.
Risk management
NYMEX Natural Gas - http://www.nymex.com/ng_fut_cso.aspx
Natural gas is a traded commodity on the New York Mercantile Exchange (NYMEX). As a result, gas prices are determined by the supply and demand in the North American market. Regulated local energy utilities buy their gas on the open market and pay the current market rate.
The difference between the regulated utilities and natural gas marketers, is that the marketers are allowed to hedge their bets by buying and selling on the energy commodities market, something that utility companies aren’t allowed to do. What this means is that natural gas marketers are able to purchase bulk natural gas on the open market when prices are low. This allows gas marketers to offer consumers better prices and fixed natural gas rates that shelter their customers from the fluctuations of the energy markets.
Things you should know about Natural Gas
Current Natural Gas Prices
Falling industrial demand, coupled with high inventory levels in North America has caused a significant decline in natural gas prices in the last 6 months. While natural gas prices tend to rise during the cold winters months when consumers heat their homes, the bulk of natural gas is consumed by heavy industries and manufacturers who are cutting back on their consumption in response to the deepening recession.
Natural gas prices tend to track oil prices which have plummeted from their July 2008 high of $147.27 per barrel to a 5 year low under $40 a barrel. Similarly, natural gas prices have dropped from a record high of $13.58 U.S. per million BTU in July 2008 to the current price of $5.37 U.S. per million BTU as of late January 2009. Low oil and natural gas prices are a rare piece of good news for American consumers.
- Since 1999 natural gas prices in North America have tripled.
- Natural Gas is the second most important energy source after oil.
- Natural Gas is used to supply 20% of all electricity and 60% of all home heating.
- Electricity prices have also doubled over the last 6 years
