Should you sell contracted fuel?

Let’s address the elephant in the room shall we? Many energy marketers often ask themselves if they should in fact sell or aggressively promote contracted fuel. As a fellow energy marketer myself, I have struggled with that very notion. At the end of the day, the decision is not ours to make, but actually the customers. It is our obligation as energy marketers to meet the demands of our customers in our local marketplace. With taking a much more aggressive position, it is our obligation as business people to embrace markets that can yield exceptional growth potential. For example, if contracted sales are not particularly popular in your area, you can be the energy marketer to pioneer that market, and you will in fact benefit tremendously.

But you must know the difference between the risks versus the rewards.

You may be asking yourself what the risks are. Hedging risks exists in several areas, most of which can be effectively managed, reduced or eliminated. First and foremost it is important thing to have in place is a structured system for monitoring and managing the entire process. The Destwin ARM system provides this control and automation to allow for timely and accurate hedging that maintain a supply and hedging portfolio in a balanced equilibrium at all times. There are certainly a few things that cannot be forecasted, such as the weather, which will have a direct impact on volumetric sales, however there are hedging techniques that can be used to mitigate these risks, which will provide further benefit to consumers. The rewards of selling contracted fuel are many. If done properly, and energy marketer can secure a predictable healthy margin, and ensure a predictable margin well into the future. The benefit to the consumer of course is that that their fuel cost is predictable into the future. The contract also ensures what we refer to as COAS (Contractually Obligated Automatic Service), which prevents defection from the company. In recent years, both wet barrel and paper trading markets have become somewhat extended, and now offer opportunities for contracts as long as 5 years. This obviously extends the contractual obligation and the benefit to the customer as well.

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