November 2022 Volume 4

OPERATIONS & MANAGEMENT

Scared by Today’s Energy Prices? Know Your Options! By Luke McAuliffe

A recent article in Natural Gas Intelligence, a daily publication tracking natural-gas prices, began: A confluence of entrenched domestic demand, mounting calls for U.S. exports of LNG and modest production growth – all factors forecast to endure – propelled natural gas futures above $9.00/MMBtu in August and could keep upward pressureon prices for years. There’s a lot of information to unpack in that one sentence, but for those FIA members who have been reading my articles and those of my colleagues at Transparent Energy over the last year, the wisdom imparted here should come as no surprise: 1. Lots of “bullish” factors have driven prices up. 2.Those bullish factors drove natural gas future prices up above $9.00 (note: prices have since come down, but high volatility remains).

3. And this is the pronouncement that should scare you the most: these factors “ could keep upward pressure on natural gas for years . ” Later in the NGI piece, an analyst says prices could climb to $13 or higher, capping off his comments with, “We could see some pretty horrific numbers.” Again, those of you who know Transparent Energy and read our regular stream of market insights and commentary understand we are not scare mongers. Our business is built on sharing information with energy buyers (electricity, natural gas, renewables) such as yourselves so you can make fact-based procurement decisions .

Know Your Options: Procure EnergyThrough Auctions Over the course of the last three years, we have also written many articles about the superiority of online auctions for procuring energy for your company’s needs. Most people remember that online auctions work so well because they spur competition among suppliers, forcing them to bid down the price for your energy contract. That, of course, is one of the beauties of our online auction process – getting the best price from the market. But Transparent Energy’s online auctions deliver many other benefits, another of which is critically important to you right now in this historic, extremely volatile (and challenging) energy pricing environment: price discovery .

When Transparent Energy runs an online auction to procure energy for an FIA member, we don’t just run one auction – we run several in succession. Over the course of one auction event, we might run an auction for a 1-, 2-, and 3-year term; we might run those same terms again but for a variable vs. fixed-price product; and on top of that we might layer in different amounts of green energy. I’ll show you exactly how this works in a minute, but the key thing for you to understand is that by having Transparent Energy run your energy procurement event via an online auction, you will gain something not available anywhere else in the market: you will get to see exactly how the market is pricing your energy load. So, what does this mean in practice? It means everything, because it gives you options – it puts you in control to make the best decision.

FIA MAGAZINE | NOVEMBER 2022 54