Gas Supplier Collateral Requirements
- Duke Energy calculates both its winter and summer financial exposures to the operations of each gas supplier participating in its Gas Firm Transportation Program.
- The winter financial exposure period begins October 1st each year and ends March 31st of the next year.
- The summer financial exposure period begins April 1st each year and ends 6 months later on September 30th.
- Duke Energy evaluates financial statements provided by each gas supplier to determine whether the supplier is entitled to any unsecured credit.
- If the financial exposure to Duke Energy exceeds the unsecured credit, if any, Duke Energy grants to the supplier, the difference must be secured with a Parental Guarantee of Payment, an irrevocable Letter of Credit, a cash deposit, or other mutually agreeable security or arrangement.
- Duke Energy provides each supplier a 10-business day notice prior to the beginning of both the winter and summer financial exposure periods, informing them of any financial security actions that must be taken prior to the beginning of the new season.
- In addition to seasonal collateral changes, financial exposure may be recalculated during a given season due to changes in gas volumes and/or number of customers within a supplier’s pool. When such situations occur, a gas supplier is required to take the necessary financial security action within 5-business days of being notified by Duke Energy.
Overview of Duke Energy’s Financial Exposure Calculation
- Duke Energy calculates its financial exposure to each gas supplier for both the winter and summer collateral seasons.
- For each season, Duke Energy looks at peak month usage for a 30-day period and applies anticipated market prices to the peak month gas volumes.
- The exposure calculation for the winter season takes three days of the gas supplier’s maximum daily quantity usage multiplied by a rate that considers both the pipeline penalty rate for overruns and Duke Energy’s propane production rate.
- The remaining 27 days of peak month winter usage is multiplied by the greater of Duke Energy’s highest delivered city gate cost of gas in the last 3 years, the current forward NYMEX price, or Duke Energy’s equivalent replacement cost of vaporized propane.
- In addition, the calculation includes a debit for pipeline reservation charges and credits for “banked” gas.
For more information regarding Duke Energy’s gas supplier collateral requirements, please view Duke Energy’s current Gas Supplier Collateral Notice Filing with the Public Utililities Commission of Ohio.
Sample Winter Collateral Calculations
Below are links to two spreadsheets showing the winter collateral calculations for a gas supplier having a pool with a load of 10,000 MDQ. The first spreadsheet applies when Duke Energy bills on the gas supplier’s behalf (consolidated billing), and Duke Energy has a first secured interest in the receivables being billed. The second spreadsheet applies to dual billing, where both the gas supplier and Duke Energy issue separate invoices to a customer for their charges. The second spreadsheet also applies when Duke Energy bills on the gas supplier’s behalf but does not have a first secured interest in the receivables being billed.
Please contact your Account Manager in Duke Energy’s Certified Supplier Business Center with any questions regarding participation in Duke Energy’s Gas Firm Transportation Program.