We are often asked when the best time to buy energy is. Our answers can vary, but typically right after a warmer-than-average winter, which is what occurred in the last two years. For those of you with agreements expiring in the next 15 months, current markets may be your best option for a competitive rate should we not see that third mild winter in a row.

Nassim Nicholas Taleb, the creator of the Black Swan Market Theory, states, “The market is a very treacherous business because you don’t realize it is risky until it is too late. It is like calm waters that deliver huge storms.”

The current markets are those calm waters, but the risk of volatility (storm) is as present as ever. The graph below from the U.S. Energy Information Administration (EIA) projects a 95% chance that future gas rates will be between the upper and lower green lines. The chance of the market going higher versus lower is much greater. Essentially, waiting to try and save a few pennies could cost you and your business a few more dollars and the risk is not worth the reward. Can your business afford this potential increase in energy costs?

We recommend taking the risk of a market run-up off the table by locking in some, or all, of your usage now. Many buyers recall facing an unprecedented budget increase and the consequences of that for their operations. To avoid those increases in the future, we can segment risk by buying layers across different markets or set a trigger price to cap forward costs. Having a long runway before your current contract expires can work to your advantage on these products and we will work with you on a procurement strategy the mitigates risk to achieve your goals.

With federal policies encouraging greater use of electricity through electrification, offering rebates for EV purchases, and AI searches using ten times the electricity of a regular Google search, the demand for electricity is increasing greatly every day. We have already seen the latest capacity market in the Mid-Atlantic region increase by over 300% due to these factors. Increased demand will only yield higher rates in the future.

Is it time to protect your budget before volatility rears its ugly head?