LAS Distributor Consolidated Billing Program Secures a Hedge

October 25, 2022

As your municipal Agent, LAS takes its responsibility seriously by protecting municipal best interests.

We are pleased to announce LAS has secured a fixed hedge at a rate of $70.05/MW including fees or 7.05 ¢/kWh 15-month term commencing October 1, 2022 – December 31, 2023.

LAS is committed to providing the best options for our members and we are confident the approach and timing of the hedge were appropriate based on the various factors impacting electricity prices as small changes to forecasts in weather, supply and demand can cause big changes to market pricing.

In 2022, staff worked with suppliers monitoring the market for pricing changes to determine the appropriate time to purchase a hedge. In Ontario, natural gas plays a role in the mix of electricity sources. The Russian invasion of Ukraine created significant pressure on the natural gas markets globally in 2022, which has direct impacts on the price of electricity in Ontario.

A higher hedge price does not mean a higher overall cost for commodity. LAS applied a prudent approach to the hedge purchase. Consumption hedge levels were reduced to 45% versus of the normal 65% of total program consumption.  This approach allows a greater portion of volume billed at spot market prices, which can benefit municipalities in a volatile market.

Hedging provides budget stability with a set price for the set portion of consumption. Hedging in combination with Spot pricing along with GA are traditionally lower than TOU rates.

Increasing energy prices emphasize the importance of conservation. LAS also has several programs municipalities could access, such as energy efficiency training, facility lighting conversion to LED, and an energy planning tool.

Please contact us for more information.

Category
Energy Services
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