Inertia Resources offers an array of custom power solutions to meet our customers’ individual needs. In deregulated energy markets, large energy consumers often employ a strategy known as “hedging” to manage their energy costs. This approach involves fixing a portion of their energy costs with a fixed-rate contract while allowing the rest to float on the index market.
The fixed-rate portion provides price stability and predictability, shielding the business from potential price spikes in the wholesale energy market due to factors like supply-demand imbalance, weather events, or changes in fuel costs. It allows for better budgeting and forecasting of energy expenses.
On the other hand, the index-based portion gives the business the opportunity to take advantage of potentially lower prices when market conditions are favorable. If wholesale prices fall, an index-based rate can provide cost savings.
By balancing fixed and floating energy costs, businesses can mitigate the risks associated with volatile energy markets and potentially benefit from market lows. This strategy provides both stability and flexibility, allowing businesses to manage their energy costs effectively and align with their risk tolerance and budgetary needs. Let’s explore some of these plans in more detail.