Natural Gas Procurement and Contracting Options

Shipley Energy’s natural gas procurement experts are here to guide you through the sometimes-intimidating process of choosing an energy advisor, picking a supplier, and creating a natural gas contract that best fits your organization’s needs. We understand that having a trusted resource for your energy is paramount, as energy is often a considerable expense for a growing company or even an established business organization.

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How Does Natural Gas Procurement Work?

Step 1: Begin by Connecting with an Expert

You may be at a loss as to how to even begin the process of energy procurement or switching procurement providers. Shipley Energy strives to make ‘energy easy.’ To begin, you can call in to our Commercial Business phone line – 717-771-0772 and speak directly with one of our commercial account managers or if you prefer to receive a call or email back, feel free to submit a contact form and we will get back to you with a response by the next business day.

Every commercial client who reaches out is assigned a designated account manager who will be available every step of the way to guide you through the process of choosing a plan that is right for your organization.

Step 2: Answer Foundational Questions

During your initial call or meeting, you may expect to answer some of the following questions:

• Are you able to provide a recent utility bill?
  • A utility bill will provide your account manager with vital information such as usage patterns, tags, rate code, address, LDC#, and utility. This information is vital to understanding your business’s needs and helps to determine the best type of purchasing and contracting.
• Are you able to confirm if you are in a current supplier contract? If so, when does this expire?
  • Our account managers will need to know of any current contracts to be certain there is no risk of double contracting and to assess current utility and supplier charges. If you are paying sales tax and you are tax exempt, this is something we will make sure is corrected!
• How do you typically prefer to procure your energy supply?
  • Do you prefer to work through a broker/consultant and shop for your energy supply?
  • Do you prefer to work directly with a supplier?
  • Do you prefer consistent updates, or do you prefer to be more hands off?
  • Would you like to receive weekly / monthly market updates?
• If you prefer to work through a broker/consultant, are you willing to sign an LOA (Letter of Authorization)?
  • An LOA is non-binding, it simply provides Shipley Energy, as a broker, the authority to shop on your behalf with other suppliers. It provides peace of mind to suppliers by letting them know that a consumer is ok with sharing their information for procurement purposes.
• Do you have a timeline in mind?
  • Is your contract expiring this week or do we have several months, or more, to help you make a decision?
  • Do you have to receive board approval regarding energy decisions?
• What is your risk tolerance?
  • Would you prefer to review options that are fully fixed (albeit any required PJM approved pass-throughs)?
  • Or are you open to market-based options?

To some this may feel overwhelming, but by asking these questions, our account managers can quickly formulate a plan that best suits your organization’s needs. We understand that every business is different, and one size does not fit all when it comes to energy.

Step 3: Brokered or Direct Supply: Pricing Presentation, Setting a Strategy

Your newly assigned account manager will compile the data, and begin assessing and creating an energy plan, just for you.

If you choose to go the route of brokering your energy, we typically require 1-2 weeks. This provides us with sufficient time to consult all our supply partners and compile price offers for presentation. If you choose to go the direct supply route, we typically can provide an offer on the same-day but may require a day or two more for our team to compile the data internally so we may provide our most competitive price.

Once your account manager has price offers ready, they will schedule time to run through these options and discuss the pros, cons, and possibly a long-term strategy. If you don’t like what you see right away and choose to see if the market will move in a more favorable direction, we can easily refresh offers and present them to you when both parties feel the time is right.

Once you are ready to move forward, your account manager will provide a contract representing the agreed upon price and the terms requested for your review prior to execution.

Step 4: Executing a Natural Gas Procurement Contract

When you choose to execute a contract with Shipley Energy or Shipley Energy Advisors, we will assist you through the entire process. Typically contracts and pricing are only valid through EOB the same day they are presented. Your account manager will advise you of this timeline to make sure we can execute as promised. We can offer a PDF contract for signature, or we can send the contract to you via an e-signature platform for ease of execution. Once the contract is signed, we will confirm enrollment, start date, end date, total price, tax exemption status, and any other relevant information. You will receive a countersigned fully executed version of the contract for your records once the transaction is complete.

Once your initial contract has been executed, your Shipley Energy account manager will actively monitor your account status and check in however often is necessary. We can provide weekly market updates, quarterly check-ins, or updates just once per year if that is your preference. Your account manager will always check in once any new contract begins and request a first bill to confirm all is well with pricing, taxes, and supplier status.

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Types of Natural Gas Procurement Contracts

As we mentioned previously, energy can be confusing and often time-consuming. Your account manager will be sure to discuss the many contracting options we have available to make sure you choose the right plan for your organization.

Natural Gas Contracting Options

• Fully Fixed with 100% swing
  • Best option for customers who don’t want any surprises. Locks in your NYMEX and Basis, with full requirements so that you pay the same prices for the entirety of your contract.
  • A fully fixed with 100% swing contract is best for customers whose #1 priority is price certainty and may have unpredictable usage patterns.
• NYMEX lock
  • Maybe you like what NYMEX looks like right now, but the price of Basis just isn’t floating your boat. You can choose to lock in just the NYMEX. If later you like the price you see for Basis, we can provide a secondary contract when the time is right.
  • A NYMEX lock contract is best for involved customers who are a little more risk tolerant and open to playing the market.
• Basis Lock
  • Maybe you like what Basis looks like right now, but NYMEX is skyrocketing. You can choose to lock in just your Basis cost and let the NYMEX float. If NYMEX is more favorable several months later, we can provide a secondary contract when the time is right.
  • Basis lock contracts are best for involved customers who are a little more risk tolerant and open to playing the market.
• Discounted NYMEX lock with floor
  • A new offering for 2025 that allows you to take advantage of a discounted NYMEX lock! A discounted NYMEX Float (with a floor, no ceiling).
  • For example, an offer would look something like this: NYMEX float (-10 cents) with a floor of 2.95/Dth.
  • Benefits: Instead of paying the NYMEX settle, the customer would benefit from a discounted NYMEX price when markets are lower.
  • Discounted NYMEX lock with floor contracts are est for involved customers who are a little more risk tolerant and open to playing the market.
• Fully Fixed with 5%, 10%, or 20% swing
  • We can fix your NYMEX and Basis, and you can benefit by not paying the cost for full requirements.
  • Fully fixed with a percentage swing contract can be a great option for customers who have predictable usage year-round.
• NYMEX Hedge
  • Shipley Energy can offer the option to layer in multiple NYMEX hedges. Maybe you kind of like the market now but aren’t fully in agreement to lock in 100% of your NYMEX. You can choose to lock in just a portion of your expected usage, such as locking in 25% of your NYMEX and letting the balance float with the market. If you like what you see later, you can lock in the rest. Or you can do multiple hedges if that is your preference. Shipley Energy can manage up to 6 NYMEX locks per period.
• Basis Hedge
  • Shipley Energy can offer the option to layer in multiple Basis hedges. Maybe you kind of like the market now, but aren’t fully in agreement to lock in 100% of your Basis. You can choose to lock in just a portion of your expected usage, such as locking in 25% of your Basis and letting the balance float with the market. If you like what you see later, you can lock in the rest. Or you can do multiple hedges if that is your preference. Shipley Energy can manage up to 6 Basis locks per period.

Why are there so many contracting options?

We feel that one-size does not fit all when it comes to energy procurement. If you are unfamiliar with the options above or require additional clarity, your account manager is available for a call, video chat, or email whenever you may have a question.

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Case Study – The City of Cincinnati, OH

The Greater Cincinnati Water Works (“GCWW”) and the Metropolitan Sewer District (“MSD”) of the City of Cincinnati have been among Shipley Energy Advisors largest successes. The initial result was more than $10 million in savings the first year, with GCWW and MSD saving millions of dollars per year thereafter. We successfully moved GCWW and MSD to a sophisticated block and index approach to energy purchases, allowing them to attain lower prices in a much more predictable fashion. We have successfully sold solar RECs for Cincinnati, assisted with the city’s largest natural gas procurement RFP, managed their electric and natural gas aggregation solicitations and negotiations, and actively participated in rate case and regulatory proceedings on Cincinnati’s behalf. Through the natural gas aggregation program, we helped Cincinnati become the first Ohio city with a renewable bio-gas opt-in program. SEA is also working with the city to explore a low-cost, long term generation services contract for service directly from a generation facility, and has worked closely with Cincinnati on its 13MW solar project.

Conclusion

Natural gas procurement and contracting is complex and varies based on the distinct needs of each business. However, we’re here to make the process straightforward, providing you and your business with the confidence needed to make an informed decision.

Ready to take the next step in your natural gas procurement? Reach out to the Shipley Energy team today – call 717-771-0772.

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