The NorthBridge Group - Economic and Strategic Consulting

Regulated Power Supply Procurement

Regulated power supply planning and operations have become increasingly complex:

Procurement involves an increasing and varied set of uncertainties:

  • Competitive wholesale prices
  • Fuel costs
  • Environmental risks

Utilities attempt to achieve several goals that sometimes compete with each other:

  • Reduce both short and long term costs
  • Lower exposure to market prices
  • Avoid above-market commitments
  • Accomplish environmental objectives

There is a greater diversity of hedging instruments than there was in the past:

  • Physical
  • Financial
  • Multi-commodity (electric, gas etc.)

NorthBridge helps its clients understand and analyze the tradeoffs between different procurement strategies, paying close attention to the risks and costs that such strategies may mitigate in the future. For example, we have determined the relative value of various utility-build options against a go-to-market strategy, recognizing the flexibility of such build options. As another example, we have helped our clients in bilateral markets manage risks and achieve savings by integrating commitment and dispatch decisions with the competitive market.