November 11, 2021 — Block and index is an electricity product that is rising in popularity, particularly in today’s energy market. This video explains how this product works.
Energy rates have been falling since 2008, and most clients could bet on a year-over-year cost decrease. With each new supply agreement, their top question was, “How much am I saving this year?”
But now, energy consumers are facing the prospect of a price increase, which has them asking, “What do I do?”
Do you fix all of your usage at a higher rate and hope you made the right decision? Or do you switch to a variable rate product and pray for mild weather?
In times of market volatility, there’s a third option that rises in popularity with electricity users called a block and index product.
How does block and index work?
A block and index product allows you to fix a portion of your usage, leaving your remaining usage to “float” on a variable rate or to be fixed at a later date. This product allows you to mitigate your risk over time.
For example, you could lock 50 percent of your usage now and watch the market for an opportunity to lock the other half. Or you could fix a third of your usage and layer in several purchases later in the year.
This “layered” approach protects you from making the wrong move and potentially missing out on lower rates in the future.
If you’re unsure about how to manage your electricity costs during a volatile market, block and index might be a good solution for you. Contact one of our energy advisors to learn more.
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