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One of the key attributes of deregulation is the ability to choose from a wider range of pricing and billing options. At Santa, we try to provide products and services to fit the needs of our customers. Each customer has a different manner of running its business. Some are trying to achieve pricing certainty and others may be willing to accept more price risk if it can offer the opportunity for lower costs. Each of our pricing options is a different mix of these objectives, and we can help you understand how you might be affected by choosing one option over another. In addition, the term of a fixed pricing agreement also represents a balance between price certainty and price risk.

Fixed price, open quantity requirements
Customers who choose this pricing method are seeking the highest level of price certainty. Pricing will be fully protected by Santa and will be held constant throughout the term of the agreement. the fixed price will include insurance for quantity differences from estimates, and the term will be set longer or shorter, depending on the level of current market prices versus perceived future market prices. The risk in this type of agreement is that future market prices could fall below the locked-in pricing level of the contract.

Fixed price, defined quantity requirements
Customers who choose this pricing method are taking a little more of the price risk in order to get a lower fixed price. Pricing for the monthly quantities specified in the agreement will be fully protected by Santa and will be held constant throughout the term of the agreement. However, deviations from the defined market quantities will be priced at market prices. If you undertake, then your leftover gas is credited back at the market price, and you will pay market pricing for monthly consumption in excess of the contract quantity. You are taking o some of the price risk on incremental differences each month instead of paying Santa to insure a fixed price. One way that this product might be used is to fix price for a percentage of anticipated requirements, and purchasing the remainder on a spot price basis. This could provide a hedge for the bulk of your needs, but still allow for some movement if you believe market prices might decline.

Fixed adder to index
When future commodity prices are perceived as high, customers may elect to float the commodity price each month with a fixed adder that includes Santa’s cost of transporting the gas from the point of commodity pricing (Henry Hub, Louisiana) to the local utility distribution system. This cost of transportation, called the basis differential, is also market based, and therefore subject to some level of volatility. Locking it in provides some level of price stability, but it also might be priced higher than it will be in future months. The index used to determine the commodity price each month is typically the NYMEX settlement price for the contract. Santa will allow its customers to float the commodity, then convert the remaining portion of the contract to a fixed price at any one time during the term.

Spot or market pricing
Customers may elect to fully float their price because of a belief that the current pricing levels for both commodity and basis differentials are higher than they will be in the future. This option can be chosen for as little as one month, or as long as you wish. You simply pay a fixed mark-up over Santa’s wieghted average cost to serve customers for the month. This pricing carries the full risk of price volatility, in addition to the full opportunity that might come from falling market prices.

BTU pricing
If you have equipment that operates on both oil and natural gas, Santa can put together an optimal fixed or floating price program using the two fuels together as a single “BTU” price. All energy consumed is billed in units of BTU on a single invoice.

Billing flexibility
Santa can combine your utility transportation pricing with our commodity price into a single bill. We also offer aggregation of accounts onto a single bill, or into groupings as specified by the customer. Our sales or customer care personnel can familiarize you with the pros and cons of these options.

Want to know more?
Contact Tim Costello at (203) 362-3332, extension 1345.

Santa Energy • New England's Full Service Energy Products Company • 1-800-937-2682
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