Director, Projects & Asset Management, Neal Daney – “The 3 T’s”

There are many things to consider when building sustainable, predictable rates for your customers. But, one thing is for certain—reducing diversity increases risk to your consumers.
Diversity in a power supply portfolio can mean a multitude of things, but let’s break it down into the 3 T’s—technology, type, & term:

• Technology—natural gas, coal, hydro, wind, & solar
The natural gas market is historically low today and so is wind. It won’t always be that way. Just as in real estate, the energy markets move in cycles.
• Type—Base-load, Intermediate, Peaking, Energy Only
You wouldn’t go to the golf course with 6 drivers in your bag, nor should you have 6 baseload products in your power supply portfolio. The variety in your portfolio will strengthen a
positive outcome.
• Term—1 month, 1 year, 5 year, 10 years or longer
To reduce risk, it is important to have portions of your portfolio expiring at different times.

A well-diversified portfolio doesn’t mean that your community will have the lowest rates in the State, but it also means you won’t have the highest either as market conditions change over time. Building a power supply portfolio is comparable to running a marathon…it is not a sprint. Make sure your community is preparing for the long haul. Please call KMEA if you would like to discuss your power supply portfolio and the options available to you.