Natural Gas Pricing Options

Enspire Energy is more than just a gas supplier. We work hard to educate our customers about the natural gas market
and their pricing options, assisting our customers in making smart and informed decisions on their natural gas
supply purchasing. We offer a variety of flexible pricing options and terms for natural gas so that we can customize a
solution to best meet your facility’s budget goals and risk management expectations.

Fixed Price Natural Gas Supply

Fixed price natural gas is
a product where both the NYMEX/ Commodity portion of the natural gas pricing and the transportation basis portion of the pricing are both fixed into one combined price for a specific term.

Enspire Energy can provide fixed price pricing options for terms from one day up to three years.

*Price Certainty *Low Risk *Less Management

The benefits of a fixed price natural gas supply price are:

Budget Certainty
For customers that have annual budget targets or requirements, fixed pricing allows you to set the price for the desired term and then have the certainty of your pricing for that term.

Avoidance of Price Spikes/ Volatility
Fixed pricing insulates customers from the price spikes that occur when the unexpected happens in the gas market, such as extreme price movements due to polar vortexes and periods of high demand. You can rest assured that your price will not change for the length of your contract term despite what is happening in the natural gas market.

More Time to Focus on Your Core Business
With a fixed price strategy in place, you can focus on what you do best, with the peace of mind of knowing your natural gas pricing is locked in at a price that works for your facility. A fixed price does not need active management of daily/ monthly market conditions that other pricing options may require.

Index Priced Natural Gas Supply

Indexed price natural gas is a product where the Commodity portion of the natural gas pricing defaults to a published index price. The index may be a daily index, such as Platt’s Gas Daily, or a monthly index such as Inside Ferc. The index point selected may be at the Henry Hub (NYMEX equivalent locational point), at a pooling point, or at a gated “citygate” point.

Typically, there is a differential that is added or subtracted to the index point. This differential is fixed for the term of the contract, and incorporates any pricing differentials between the index point and the point of delivery as well as the margin/ cost to serve a customer. Enspire Energy can provide index pricing options for terms from one day up to three years.

*Price Flexibility *Higher Risk Tolerance *More Managed Approach

The benefits of a fixed price natural gas supply price are:

Flexibility to Market Conditions with Easy Conversion to a Fixed Price Option at a More Advantageous Point in the Market
The natural gas markets have changed dramatically over the past few years in the Mid-Atlantic due to the explosion in shale gas production in the region. Traditional flows of natural gas supply, from the Gulf of Mexico to the north, has changed, as now the most economic method for gas transportation may be from the shale production zones in the Marcellus and Utica to Mid-Atlantic delivery points. This has dramatically shifted the basis spreads between the delivery points in the region. By locking in an indexed price option, customers may take advantage of changing market conditions and pricing drops. An index price is essentially floating with the market price, and a customer can easily convert an indexed price to another pricing option, such as a fixed price, should market pricing reach a point where the customer would like to commit to a fixed price.

Allows Volume Flexibility for Customers’ with Unpredictable Load Forecasts
Since an index price is a current market based price, it is easy to adjust volumes both on a month-ahead and daily basis with minimal risk on price movements for buying back volumes, when customers choose an index price. For new plants, or customers that are seeing shifts in their energy usage due to equipment changes, or operational changes, an index price may provide the best volume flexibility without the risk of additional costs for selling off unnecessary gas volumes in a market that has moved lower from the original price lock.

More Managed Approach to Gas Purchasing
Since the Index price changes monthly or daily depending on which option a customer chooses, index pricing is best for customers what want to stay in-tune with current market conditions. This option requires active management on the part of Enspire Energy, as well as strong communication with the customer to manage price swings both higher and lower.

NYMEX Triggering/ Hedging

Customers may choose to lock in a fixed basis price for delivery to their LDC, while keeping the Commodity/ NYMEX portion of their price open. The NYMEX portion of the price may then be locked in for a month at any time prior to the NYMEX Natural Gas Contract Expiration or Settlement Price. The NYMEX settlement occurs 3 business days prior to the start of a new month. At Enspire Energy, customers have until Noon EST on the day of the NYMEX settlement to trigger the NYMEX portion of their price for a given month. Should a customer not trigger the NYMEX price by the deadline, then the commodity portion of the price will be the NYMEX settlement price for that month.

Customers with volumes of less than 10,000 Dth/ month are allowed two triggering events per month. Customers with volumes greater than 10,000/ month may trigger in 10,000 Dth increments, with one additional trigger for a remaining volume less than 10,000 Dth. By providing flexibility in triggering, this allows customers to best manage risk, by fixing the commodity on some of their volumes, while still having the ability to move with the market on a remaining portion

Customers may trigger the NYMEX portion of the price by utilizing the following three options:

Market Order:
Locking in the NYMEX portion for a specific volume at the current market offer price for that month. The offer price may be higher or lower than the last trade. This type of order guarantees that the transaction will get done, as a market order is typically filled almost immediately during normal trading hours, 9:00 AM EST until 2:30 PM EST.

Limit Order:
The customer sets a specific NYMEX price, which is below the current trading level, as a targeted price to get filled at. Should the NYMEX trade through that price, then the order will get filled. There is no guarantee that a limit order will get done, as the market needs to trade at or through that point for the limit order to get filled. However, this is a great tool for a customer with a specific pricing point in mind. Enspire Energy will also provide updated market intelligence to assist the customer in determining if limit order levels are reasonable. After hour fills of limit orders are done on a best efforts basis. A customer may place a limit order good for that day of trading, which would expire at the end of that day’s trading if it did not get filled, or good until expiration, which would remain in place until the settle for that month if it did not get previously filled.

Stop Loss Order:
The customer would set a buy order at a price above where the current market is trading. Then if the market moves upward and trades at that price, the buy order would become a market order and would get filled at the current market offer price. If the upward market movement occurs in after hours trading, a buy order may be filled higher than the original set price, due to the gap up in the market before normal trading hours resume. Stop loss orders are used when a customer wants to participate in a falling market, but wants upward price protection should the market spike up. It creates a ceiling on a customer’s NYMEX pricing.

Comparison to Utility Rates with Guaranteed Savings

Some customers have the option to buy gas form their LDC on a monthly basis at a pre-set tariff rate. Typically, this is only a service that can be offered to customers that have special arrangements with the utility. Examples of this would be when a utility has the ability to adjust their monthly tariff rate to compete with alternative fuel costs, or when a customer has subscribed to stand-by service. Enspire Energy would compare market pricing to these pre-set monthly tariff rates, and would only serve a customer should they be able to offer savings under these tariff rates for a given month or period.

Virginia Natural Gas (VNG) transportation accounts have the option to switch from utility tariff rate service to transportation gas on a month to month basis. Each month, once the VNG rates are released for the upcoming month, Enspire Energy will communicate with our customers the rates and the commodity price we would need to be under to save our customers’ money for that month.

Should market pricing be below the rates, then Enspire Energy would serve you for that month at a guaranteed savings.

Should market pricing be above the rates, then Enspire Energy would not transport gas to you for that month so that you receive your natural gas at the less expensive tariff rate. The VNG guaranteed savings plan is a great way for customers to know that they are beating the utility rates whenever possible, and since all of the paperwork and management is handled by Enspire Energy, it allows customers to focus on other priorities.

Enspire Energy looks at a customer’s total energy portfolio to make sure we are always utilizing the most effective method to supply your natural gas requirements, even when that means switching you to your LDC tariff rate

Fuel Switching

For customers that maintain a back-up fuel, such as #2 oil, #4 oil, #6 oil, diesel, propane, or coal, Enspire Energy will work with you to make sure that you are utilizing the most cost effective fuel to run your facility. While natural gas may be the cheaper option at the start of a month, periods of increased demand, polar vortexes, and utility interruptions/ restrictions can make natural gas pricing run-up. At these times, Enspire Energy will collaborate with you on comparing natural gas pricing to your alternate fuel costs, and assist you in making the best decision on which fuel to use to minimize your costs.

When customers have a complex energy portfolio, it is important to have a natural gas supplier that is more than just a supplier.

Enspire Energy wants a long-term relationship with our customers, and in changing market conditions, we take a partnership approach in helping our customers make smart decisions on their energy supply mix.

Enspire Energy has saved customers thousands of dollars in avoided costs by minimizing exposure to price spikes during periods of utility restrictions. Our team has also gained customers thousands of dollars in additional savings by selling natural gas into a rising market and having the customer switch to an alternate fuel. It is this proactive approach to difficult market conditions that sets Enspire Energy apart from other natural gas suppliers.