The Franklin Plan combines the advantages of fixed and index natural gas purchasing strategies while providing a hedge during traditionally volatile winter months. This natural gas purchasing strategy is made up of two distinct parts, which rotates between fully fixed and index strategies during specified periods of the calendar year.
- During the months of November to March during the contract term (which traditionally are the most volatile and susceptible to price spikes) receive an all-inclusive fixed natural gas rate for contracted volumes
- For the usually less volatile months (April to October) clients will be on an index-based program for the commodity, which avoids potentially costly risk premiums in times of generally less heating usage, usually with a fixed transportation basis
- Plan can be started in any month, and the terms offered will start at a minimum of twelve months, while at least covering one whole winter period (November through March)
- Hybrid strategies may be subject to “usage bands” during winter periods in which the all-inclusive price is limited to a range of usage (usually a percentage above and below historical or projected usage amount); otherwise an index or other variable rate applies to the overage or clients may be charged for the underage
- May not be available in all areas
How do I know if a hybrid strategy is the right fit?
If you have a desire to protect yourself during the typically higher-price winter months with a fixed rate, but would like to purchase gas during generally lower usage months at a competitive, index-based price then a hybrid strategy may be right for you.
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