Creating value in the supplier/marketer relationship requires knowledge of both the market and potential counterparties, a pair of consultants said during a panel discussion moderated by New York Mercantile Exchange's (Nymex) Joe Raia, senior vice president of marketing, at GasMart 2008 in Chicago last week.
Wachovia's Janelle Scheuer, director of commodity derivatives, said that when choosing an energy supplier or marketer to help manage risk, "you want to make sure that your counterparty is going to be there for you, they have strong credit strength, they're going to be customer-focused -- that everything that they can do to make you look smart in front of your boss is going to be happening.
"If they can leverage up other areas, if they can offer you customized types of products to meet your needs, create some solutions and give you market intelligence...you have a competitive advantage [and] you can make decisions based on more knowledge instead of less knowledge."
"One thing that I have learned over my career is you have to focus on the entire pricing equation of natural gas," said Integrys Energy Services' James Stewart, director of energy consulting. He recommended a comprehensive program approach, advising middlemen to consider natural gas cost components -- Nymex commodities (80%), transportation from producing region to citygate (10%) and utility distribution and fixed fees (10%) -- as well as a series of inputs, including facility characteristics, budgets and utility tariffs to help manage energy dollars.
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