What does Hedging mean and what are its advantages?

Hedging basically means to mitigate or reduce risk.  This can be applied to either natural gas and/or electricity consumption.  Hedging your energy consumption means to reduce the risk of your cost going up when the market goes up.  So, hedging a part of your consumption while leaving the rest on the market makes financial sense.  That way, your average price is stable while the market is in constant fluctuation.  Furthermore, you want to make sure that the hedged portion of your energy portfolio is the portion most susceptible to the market’s increase.  This pertains mainly to electricity consumption since you will pay a higher price during the day compared to what you would pay at night or on weekends.  If your company consumes most of its electricity throughout on peak hours (during the day), then hedging might be what you need.  However, if your company consumes most of its electricity consumption throughout the night or on weekends, then hedging might not be your best choice.

Details regarding hedging will be explained in great detail throughout the consultation process.  Contact us for more details regarding our electricity and natural gas hedging process.