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Power
Contracts Offered by Canadian HydroContract
for Differences (CFD)
CFDs allow the customer to fix the price for energy purchased or
sold in the future, whether next month or years into the future.
In a CFD, the customer exchanges the variable price for electricity
(based on the Alberta Power Pool Price) in exchange for a predetermined
fixed price per megawatt hour. Because CFDs are a financial rather
than a physical contract, settlements are done in cash. Each month
the parties exchange payment, the customer always paying the fixed
price per megawatt hour of electricity and Canadian Hydro returning
(or collecting) payment based on the difference from the average
Alberta Power Pool Price for that month and the CFD price. The financial
nature of CFDs makes them a great way for customers to pass the
risk associated with price to Canadian Hydro with either spot price
variances or existing long-term variable price contracts.
Typical
Scenario
A customer is on default supply with their incumbent utility and
is therefore exposed to the volatility of the Pool Price. The customer
is interested in removing the variability of the price but does
not want to self-retail since self-retailing requires the customer
to post prudential (deposits) with the Power Pool and the incumbent
utility. As a result, the customer decides to enter into a CFD with
Canadian Hydro. The CFD price is set at $66 per megawatt hour and
the customer will now have the price of power pegged at $66 per
megawatt hour of electricity consumed for the duration of the CFD,
with Canadian Hydro taking the market risk of the price.
That is, customers will continue to receive their usual bills from
their utilities for electricity consumed at the spot price of electricity.
Canadian Hydro will then issue payment to the customer if the average
monthly Pool Price was higher than $66 per megawatt hour, or the
company will issue a bill to the customer if the average monthly
Pool Price was lower.
Month 1
Alberta Power Pool Price: $68.50/MWh
CFD - Fixed Price: $66.00/MWh
Quantity: 1,000 MWhs
| Party |
Receives |
Pays |
Net |
| Customer |
$2,500
- from CHD |
$0 |
$2,500 |
| Utility |
$68,500
- from Customer |
$0 |
$0 |
| CHD |
$0 - from
Customer |
($2,500)
- to Customer |
($2,500) |
Month
2
Alberta Power Pool Price: $63.00/MWh
CFD - Fixed Price: $66.00/MWh
Quantity: 1,000 MWhs
| Party |
Receives |
Pays |
Net |
| Customer |
$0 - from
CHD |
$3,000
- to CHD |
($3,000) |
| Utility |
$63,000
- from Customer |
$0 |
$0 |
| CHD |
$3,000
- from Customer |
$0 - to
Customer |
$3,000 |
If you have additional questions about power contracts offered
by Canadian Hydro, please contact:
Steve O'Gorman,
Manager, Marketing and Communications
Ph: (403) 298-0262
E-mail: canhydro@canhydro.com
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