Managing Energy Price Risk During Extreme Weather: What Manufacturers Need to Know
Executive Summary
Extreme weather events like Winter Storm Fern are no longer outliers – they are now a core driver of energy cost volatility and operational risk.
In our recent session with Industrial Energy Consumers of America, Trio experts unpacked:
- Why energy markets are becoming more volatile
- How disruptions like OFOs drive rapid cost escalation
- What leading organizations are doing differently to protect themselves
Key Takeaways
1. The Market Has Fundamentally Changed
Energy markets have shifted from stable → volatile and constrained.
What’s driving this:
- Increased LNG exports
- Rising data center demand
- Reduced coal generation
- Infrastructure constraints
What it means:
Supply can’t flex fast enough – price becomes the balancing mechanism
Bottom line: volatility is structural, not temporary
2. OFOs Are the Trigger for Cost Spikes
Operational Flow Orders (OFOs) force a shift from monthly to daily balancing.
Implications:
- Non-compliance penalties: 2–10x spot gas prices
- Rapid increase in required spot market purchases
During Winter Storm Fern:
- Prices exceeded $100/MMBtu in some regions
- Manufacturing sites faced 7-figure exposure
Bottom line: cost risk is driven by how you respond—not just the event
3. Speed of Decision-Making = Financial Outcome
Energy procurement shifts to a compressed, day-ahead timeline.
- Gas must be purchased before 2 PM for next-day delivery
- Prices can move $10–$20+ within hours
Organizations without:
- Pre-approved decision thresholds
- Real-time operational visibility
- Clear communication channels
…lose control of cost
Bottom line: slow decisions = expensive decisions
4. Active Risk Management Drives Measurable Savings
One manufacturing client during Winter Storm Fern:
- Secured required gas under peak conditions
- Adjusted quickly as operations changed
- Resold excess supply in real time
Result: ~$120K saved in a single weekend
Bottom line: value comes from continuous management – not one-time decisions
5. Contract Structure Directly Impacts Risk Exposure
Supply structure and transportation strategy matter—especially under stress.
- Interruptible vs. firm transportation can mean:
- Millions in exposure vs. protection
- Tariff and penalty mechanics vary significantly
Bottom line: your contract defines your risk ceiling
6. Most Organizations Are Underprepared
Common gaps we see:
- No daily demand forecasting capability
- No clear ownership during critical events
- No defined “price vs. production” decision thresholds
Bottom line: most organizations are reactive, not strategic
Assess Your Energy Risk Exposure
Extreme weather events are becoming more frequent – and more costly.
The question isn’t if your organization will face this type of volatility again. It’s whether you’re prepared to respond.
We’re offering a limited number of 1:1 15-minute Energy Risk Reviews to help you quickly assess:
- Your exposure under OFO conditions
- Where contract structure may be increasing risk
- Gaps in forecasting, decision-making, and response planning
- Immediate actions to reduce cost and operational risk
Who You’ll Speak With
Your session will be led by a senior advisor from Trio’s energy supply and risk management team –the same experts supporting large industrial organizations through events like Winter Storm Fern.
You’ll speak with professionals who:
- Actively manage energy procurement and risk in real time
- Advise manufacturing organizations navigating OFOs and volatile markets
- Translate complex market dynamics into clear, actionable decisions
In many cases, your session may include experts such as:
- Peggy Stassen – Energy Supply Management leader supporting large industrial clients
- Jeff Bolyard – Market intelligence and natural gas strategy
- Iryna Soltys-Petrowsky – Real-time procurement and risk execution
- Todd Hickman – Supply strategy and contract optimization
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