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Energy hedging strategies for multi-site retail

Commercial

A 50-store retail chain hedges 60 percent of load on a 24-month fixed lock and 40 percent on RTP. The barbell strategy that protected margins through 2025.

Harry Parker

Energy Consultant, Seenra Inc

Commercial11 min readPublished

Featured infographic

Multi-site retail hedge: 60/40 barbell over 24 months

Fixed 60 percent at signed rate. RTP 40 percent absorbs wholesale curve. Total cost beats either pure strategy in 4 of 5 years.

Open graph image · /og/rate-trend.png

Multi-site retail hedging splits supply across fixed-rate locks (capture stability) and real-time pricing (capture upside in flat markets). A 60-40 barbell — 60 percent fixed at 24 months, 40 percent RTP — captured most of the upside in 2024-2025 while limiting downside in cold snaps. Strategy works best for chains with 25+ sites and a procurement team that can monitor the RTP portion monthly.

Why the barbell works

A pure fixed-rate strategy locks at the contract price and captures no upside if wholesale falls. A pure RTP strategy captures upside but exposes the customer to extreme spikes.

The 60-40 barbell captures most of the RTP upside in normal years while limiting downside in spike events. The 60 percent fixed portion covers baseline; the 40 percent RTP captures market reversion.

Implementation across 25+ sites

Run the RFP for the 60 percent fixed portion 90 to 120 days before the next contract cycle. Lock 18 to 24 months at the August through October window.

Run the 40 percent RTP portion through a designated supplier with real-time invoicing. Monitor monthly; curtail or shift production during forecasted spike events.

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Common questions

Quick answers from the editorial desk

Is 60/40 the right ratio?
It depends on volatility tolerance. More risk-averse chains run 80/20; more aggressive run 40/60. 60/40 is the historical sweet spot for chains with 25 to 75 sites.
When should I layer in the RTP portion?
Sign the fixed portion first at the August through October window. Add the RTP portion within 30 days, structured to start at the same delivery year.
Who is the counterparty?
Typically the same PUC-licensed supplier runs both books. Some chains use different suppliers for fixed vs RTP to diversify counterparty risk.
Can I break the hedge if conditions change?
Fixed-rate portion typically has $200 to $1,000 per site cancellation fee. RTP portion is month-to-month with no exit fee. Adjust the ratio over time via the next contract cycle, not mid-cycle.

Further reading

Pillar guide, cluster siblings, and state pages cited above

Sources

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