Block and Index Energy Plans
Traditional Block and Index Energy Plan
With a traditional block and index energy strategy, you can capture a fixed price, or “block”, during the contract term and any energy used above the block is billed at the index market rate. You can execute a block when you secure your initial energy supply contract or you can be initially billed 100% index and execute blocks in the future. These blocks can also include on and off-peak usage, and can vary in quantity of energy. Different energy suppliers will offer varying options. A Block & Index strategy comes with moderate risk, as portions of your energy will be subject to market rate fluctuations.
Best for: Organizations with a predictable, steady base load.
Load-Following Block and Index Energy Plan
Although it is impossible to predict exactly how much energy you will use at any given time, you can use your load shape (energy usage pattern) as a guide to hedging. If your organization doesn’t have a predictable baseload, a load-following block product may be a better fit for you. Load-Following Block and Index allows you to hedge a certain percentage of your energy usage despite volumes that fluctuate over time.
It is harder for an energy supplier to manage a Load-Following Block and Index contract within their portfolio, so you will likely pay a price premium over a Traditional Block and Index contract.
Best for: An organization that does not use a steady baseload of energy year-round. Although you may pay a price premium over a traditional block strategy, you will still be able to fix a portion of your usage while leaving yourself open to market buying opportunities.
Other energy procurement strategies for consideration are: Fixed Price Energy Plans, and Energy Hedging Strategies. You may also choose to purchase Renewable Energy Certificates (RECs) to help meet the sustainability goals of your business. Usource energy advisors are here to help. Contact us with questions and help with designing the ideal energy strategy for your business.