About 2 years ago I joined the MEUC bunch at one of their training events. If you've not been on one I'd recommend it, particularly good as a sharpener or if you are new to energy markets.
As a side note it was interesting to see a lot of sustainability managers, who normally create new-novel-ways to lower their organisations energy consumption, were being chucked the task of managing risk..
I think the point is...they didn't know, and probably still don't that they are even involved in risk management. It's a funny old game, you'd think that if you left your energy contracts consideration up to a certain point each year you were actually never exposed to risk- you were just picking the lowest cost supplier on the day you considered each time?
I suppose you can't blame anyone for thinking that. After all, these people are likely to be receiving a dozen calls a week from energy 'brokers' who claim to be able to "save them money for FREE".
Anyhow, any business looking for the lowest cost energy and only that is exposing itself to a lot of risk; after all how can you possibly pick the lowest cost day out of 250 every single year without exposing your business to a lot of volatility....& how do you know that a day with more favourable conditions won't come along later?
I think the scape-goat is normally "well no-one has a crystal ball" but if I'm honest that's a complete cop-out. Gambling and informed, well managed, risk navigation, are two very different animals.
Businesses need to start looking at the energy markets differently. Setting clear risk policies, objectives, and strategies in advance of deployment and executing these flawlessly without emotion.
A wise man once said...the markets can remain irrational for longer than you can remain solvent.
Don't leave it up to chance, your gambling.