At Clayton Energy, we start each day by pulling up the electronic data from
all the pipeline meters for our Member Network
partners. We also review the weather forecast for the next day and the week
ahead and correlate the degree days to demand. We buy gas or adjust storage by 8
am each day for the following day or the weekend. This morning activity
minimizes and usually eliminates any pipeline penalties, also helping to
optimize member storage.
We also provide long term forecasts for our members, based on historical demand
so we have the information required to provide long term hedges and make long
term storage commitments.
We have developed several tools to provide attractive long-term pricing. We
purchase NYMEX contracts, buy long term supplies at major pipeline points, and
are currently working directly with producers to purchase long term supply
packages tied to the futures market. Rather than engage in risks associated with
speculative pricing, we ensure all of our long-term supplies are matched with
our customer loads.
It is our practice to buy daily gas to manage the variations in load for our
members. By buying daily gas, we avoid purchase of excessive storage. We
supplement our daily gas with firm priced monthly gas, long term hedges, and
storage. As a result of our balancing efforts, we have never been short on
supply for a day, a week, or a month. We know how important it is for our
members to keep gas coming when it is cold--and to reduce stored supply when it
is warm.
Some small utilities still prefer to go it alone. Their suppliers typically ask
them to pick a number to hedge. We take a different view. We work hard to create
an integrated program of storage, offsets with other members, futures, daily
gas, and monthly gas to manage price. It's a balanced program that produces
attractive end results for our members. As a result, our pricing is far below
many of the utilities that are still going it alone.