Pricing Options

Given the volatility in today’s energy markets, our products offer you the opportunity to manage your budget or your pricing risk as you desire.  You can lock-in with a fixed price, float with the market on a daily or monthly basis, or do a combination of both.  You can also schedule times to lock in all or a portion of your requirements. 

For larger customers, we also offer the ability to layer your price locks and / or the ability to include price ceilings and / or collars into your portfolio as well.  We will gladly work with you to discuss and develop a purchasing plan that meets your business requirements while considering current market trends and drivers.

  • Fixed Pricing
  • Basis plus NYMEX Pricing
  • Structured Products
  • Combination or Layered Products

Fixed Pricing

Sprague’s Fixed Pricing Option provides you the opportunity to lock-in or “fix” a contracted quantity of natural gas for future contract periods.  This option provides a very high level of budget certainty and protection for the volumes under contract. 

Our fixed option offers a high level of price protection regardless of changes in market prices.  Additionally, since you are locking in your energy price for a period of time, it helps introduce a greater degree of certainty with respect to your operating costs. 

Floating or Basis plus NYMEX Settlement Pricing

OPTION ONE:

Basis plus NYMEX Settlement Pricing provides you the opportunity to float with the market and lock in at a later time.  NYMEX is the acronym for the New York Mercantile Exchange which is the primary exchange where Natural Gas futures contracts are traded.  This option allows you to lock in your Basis price (the difference between the NYMEX price and your specific utility city gate for the term you define) and allow NYMEX to float with the market. 

Pros

Allows you to benefit of floating with the market and the option of locking in at a later time.  This is the perfect option if you want the opportunity to benefit from a falling market.

Cons

If market prices rise rapidly due to geopolitical or weather driven events – your energy costs may be negatively impacted if not managed closely.      

OPTION TWO:

This 100% Floating Price Option is based on daily natural gas spot markets.  Daily markets are the most volatile over the short term – particularly in the winter.  However, these markets are historically less expensive over the longer term and may offer opportunity for significant savings over Basis plus NYMEX or Fixed Price products.  This option is available to larger risk tolerant customers on an approved basis.

Pros

Allows for significant annual savings for customers who have some level of risk tolerance but still want to have the flexibility to potentially change to another program if the market changes.

Cons

Potential for significant price swings on a month-to-month basis – particularly during the winter.

Structured products

Sprague provides a complete menu of individually tailored structured products (such as price collars and ceilings) that are custom designed to your specific requirements.  Presently, we offer these products to individual customers who consume more than 2,500 Dths in a given month and other customers on a program specific basis.

OPTION ONE:

Price Collar. Generally, this is a fixed Basis product where the NYMEX price is guaranteed to be within an established range of prices (price floor and ceiling).   There are many different kinds of traditional and accelerated Collar Products. We will gladly work with you to determine the product and price range that best meets your requirements.

Pros

Allows the opportunity to float with the market but within a pre-established range of prices.

Cons

If the market were to drop below your established floor price – your price would be above market

OPTION TWO:

Price Ceiling. This is a fixed Basis product where you establish where to cap your NYMEX price (otherwise known as a “ceiling” price.  No matter where NYMEX settles, you will be assured that you will never pay more than your established ceiling price.  This is like an insurance policy where you establish your price. 

Pros

Excellent product for bearish customers in volatile markets who want price protection and want the opportunity to float with the market.  You can also fix or lock your price at a later date if you desire.

Cons

During periods of extreme market volatility, this product may be pricey.

Combination or Layered Products.

Sprague’s state-of-the-art billing system enables us to offer our customers the ability to mix and match all of the products above like no one else in the industry.  We will explain the benefits and risks of all of our products and suggest a mix that works for you.  This is a huge advantage that may enable you to avoid settling for other costly products (that don’t meet your exact needs) and create a product mix that uniquely works for you.  Market conditions change – you need a product mix that can be changed as well.  By creating a well-designed strategic blend of products, you will be positioned to benefit in both rising and falling markets.