Energy Link today launched the Energy Link Fixed Price Electricity Contract Index. The ‘ELL index’ provides energy purchasers with an indication of trends in the price of fixed-price electricity contracts. The index does not include local losses or line charges so it is an ‘energy-only’ index.
The index is published in Energy Link’s new Energy Trendz monthly review of trends in New Zealand’s energy markets, available at www.energylink.co.nz/energy-trendz.
The index is calculated from data disclosed, under the Electricity Governance Rules, on fixed price electricity contracts, and so it is based on contracts for electricity actually traded between larger consumers and retailers. The index does not include contracts traded on the EnergyHedge platform which is traded only between the five major retailers.
Managing Director, Greg Sise, said that “the index is intended to give energy purchasers a quick and easy guide to trends in contract prices for electricity, including price movements month by month. The data put up on the contract web site is quite detailed and in a fairly raw format, but the index nicely summarises it.”
The index has a range of uses as a benchmark when renewing electricity contracts. It can also be used as a guide for budgeting prior to renewing contracts, and for monitoring the performance of an electricity purchasing strategy. The data underlying the index shows a wide spread each month, which, Sise says, “indicates that the unwary or unprepared can end up out-of-the-money.”
Sise also issued a word of caution about the use of information about electricity contract prices: “we hear a lot of people referring to EnergyHedge prices, but these contracts are not available to larger consumers and the price dynamics are different to the contracts traded between retailers and consumers. Our index summarises the movements in prices of medium to long term contracts actually traded with larger consumers.”
The calculations behind the index are comprehensive, so it is consistent in referencing all contracts, regardless of where in the country they are traded, to the key Haywards reference node on the grid just north of Wellington. Contract data is also annualised, and contracts for larger loads carry greater weight than smaller loads.
Energy Link are a leading electricity, natural gas market advisor and IT company established in 1996 and providing advice, analysis, software tools and training to assist those responsible for making energy-related decisions to reduce energy costs.
