| Bringing buyers and sellers together in this field is more than just finding the best price. It's about matching needs and responding to instant fluctuations that may change the initial parameters. It's about really knowing the participants in the industry and being sensitive to nuances, such as who has what and who wants to deal with whom. Our intimate knowledge of all sides of the deal, the power companies, institutions and investors, enables us to make successful matches. The anonymity of buyers and sellers is protected until all terms are agreed upon. Since Natsource is not a market maker, it does not act as a principal.
As a neutral player, Natsource represents the market, giving the seller's price to the buyer and reporting the buyer's bid back to the seller. If there are other sellers and buyers in the market with different offers and bids, Natsource finds them. For each transaction, Natsource runs an orderly market to match the right buyer and seller. Only when the buyer and seller agree to the terms does Natsource write up the deal. And only then are the buyer and seller told the other's identity.
For example, an electric utility is suddenly faced with an unexpectedly hot summer and needs more power. In this emergency situation, Natsource looks for a matching seller of power, negotiates a mutually agreed upon price, and executes the transaction between both parties.
Another example might involve a more complex transaction of weather hedging, designed to mirror or offset a natural position in weather. For instance, Natsource would find a seller for a power company looking to buy a cooling degree-day put option that would compensate them for lost air conditioning load if the summer turns out colder than normal. Similarly, Natsource would find a buyer for a natural gas or heating oil distributor selling a heating degree-day swap that would compensate them for lost sales and income if the winter turns out warmer than expected.
These are just two very basic examples of the many products and services, as well as the myriad kinds of transactions, Natsource offers in the field of energy risk management.
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