Energy Trading and Marketing

 

In its simplest terms, “energy trading and marketing” is the buying, selling and moving of bulk energy (electricity and natural gas) from where it is produced to where it is needed.

Wholesale electricity and natural gas are traded as commodities, much like corn or copper and other minerals. Commodity markets are frequently volatile, meaning that, unlike B.C., where BC Hydro’s retail prices are regulated and set by a tariff, the price of energy bought and sold in the wholesale marketplace can change often, and at times dramatically.

Wholesale energy prices are set by the basic market forces of supply and demand.  In North America, the price of energy is typically higher during the cold winter months, with an increased need for heating, and again during the warmer summer months when the use of air conditioning increases in warmer climates. Daily price fluctuations also exist. Demand and prices generally increase during working hours (“peak” hours) and drop overnight when activity is low (“off-peak” hours).

To move energy across markets, traders and marketers must purchase transmission and gas transportation rights/space from transmission providers and pipeline owners respectively. In B.C., for the movement of electricity, this means purchases of transmission space from  BC Hydro Transmission which operates BC Hydro’s high-voltage transmission system.  Such transmission space becomes available from time to time when BC Hydro doesn’t require it to meet the needs of its customers.

As a participant in these energy markets, Powerex buys and sells physical electricity and natural gas at market-based rates with a wide variety of energy suppliers and buyers across North America. We also hold transmission and gas transportation space to get the energy from where it is produced to our customers.

In the west, BC Hydro’s high-voltage transmission network links B.C. with  trade partners in Alberta and the western U.S. This, combined with the flexibility of BC Hydro’s predominantly hydroelectric generating system, enables Powerex to purchase electricity from the market when prices are lower, and sell electricity to the market when prices are higher.

Such energy trade and marketing activity helps match energy supply with demand and, for British Columbians through Powerex, helps support BC’s energy needs and keep BC Hydro’s electricity rates low.

Click here for a PDF glossary of energy industry terminology that will help you to better understand the energy business and the information on our website.