Puts? Calls? Energy Hedges? Complicated Choices

Abstract

Facility owners and managers as well as other energy consum-
ers face many choices in purchasing energy in deregulated markets.
The primary choice is whether to remain with the retail energy af-
filiate of the incumbent utility supplier or not. In either case, it is
important for you to know how the supplier purchases its energy
since it could affect your rates. Even staying with the incumbent
energy provider has its risks. Witness the two largest utilities in
California, where many consumers are getting retail power at fixed
rates, but market rates have fluctuated widely. This article is de-
signed to give you more insight into energy commodity markets
and recommended action steps.