Pricing of Energy Networks
In accordance with the rationale that underlies the Mexican legal framework, energy networks -conceived as natural monopolies- are highly regulated assets. Transmission and distribution companies must go through a formal proceeding known as “rate case” in order to set the rates at which they are allowed to charge its shippers for its services.
A regulated rate is a relevant element of economic regulation of public utilities since its value -requested by the interested party and approved by the regulatory body- is aimed at both, protecting consumers and at guaranteeing the network company with a cost recovery and a reasonable return.
Our experts can help any stakeholder -firms, users, regulators, policy makers- to weigh the benefits, costs, and net value of energy
system resources along all the supply chain
segments; and to design rate structures that ensure fair compensation for all who provide energy supply and services. We have a deep knowledge related to the principles, methods and regulatory concerns around energy rates that have been discussed globally. We also posses an extensive experience in applying them to local conditions.
Gadex team has first-hand knowledge of the key elements to be considered when assessing rate components - revenue requirement, efficient costs, rate base and rate of return- which are critical to achieve competing goals. Regardless of the specificity of any energy project, our advice is always focused on ensuring forward-looking rates that maximize the value of investment decisions of both, the utility and customers.
Mexican natural gas market overwhelmingly differs from the American liquid structure. Lack of peer-to-peer transactions through electronic platforms, a generic price discovery process and the absence of a wholesale market, make it utterly convenient for actual and potential natural gas consumers in Mexico to procure the fuel by means of an expert middleman capable of both, finding best specific alternatives and of assessing each of those alternatives in order to materialize the most suitable -regarding client’s profile- and optimal one -in accordance with client’s portfolio-.
In that light, Gadex is able to provide its clients with either the implementation of a tailored, all-in one procurement strategy to a
specific client, or with an action plan for the reliable and efficient natural gas supply. The
all-in one procurement process would include the unfolding of the following activities:
(i) profile and portfolio assessment;
(ii) the development of a strategy in accordance with the client’s preferences and risk profile;
(iii) the elaboration and implementation of an allocation mechanism;
(iv) proposals assessment;
(v) the selection of best and most suitable proposals;
(vi) general term and conditions: clauses negotiation;
(vii) final negotiation of the entire agreement; and,
(viii) tracking of subsequent performance.
By means of specialized tools and reports, Gadex provides its clients with actionable insights of the Mexican natural gas market’s relevant interactions that serve as key information for strategic and tactical business decisions.
Gadex’ natural gas analytics products are quantitatively solid tools based on existing relations analyses, on rigorous econometric forecasting and on high level simulation.
A natural gas transportation contract implying pipeline capacity, either firm or interruptible, represents the main shipper’s acquired asset. The contract management service that Gadex provides its clients with is aimed at optimizing the natural gas transportation agreements’ performance through the analysis of the pipeline systems’ operational conditions, the information provided by the shipper and selection of best possible inherent transactions.
Gadex develops strategies based on the client’s consumption/supply and risk profile.
The service, which scope depends on client’s needs, would include:
(i) an analysis of both, current client’s assets portfolio and its commercial and accounting management (from scheduling to invoicing processes);
(ii) a diagnosis concluding the opportunity areas; and,
(iii) the implementation of an asset management strategic plan.
The main objective of this service is to minimize client’s risks and to maximize its profit/saves, regarding its own goals.
Gadex offers continuing education for both actual/potential natural gas industry participants and, for any interested party. Gadex provides its clients with tailored training programs which level, intensity and duration could variate in accordance with the needs of the client.
Gadex trainings could be focused on the following topics (or a combination of them):
rate cases design in Mexico, the commercial perspective of the natural gas industry, the Mexican natural gas market fundamentals and current conditions, the natural gas pipeline business, natural gas finance and economics, midstream project development, economic regulation of the Mexican natural gas industry, pipeline scheduling, and, natural gas trading.
Natural Gas Infrastructure Project Development
Gadex offers guidance and representation services throughout the entire process of developing and financing natural gas infrastructure projects, from the initial, pre-development stages to the financial closing. In fact, developing a capital-intensive project in an emerging market, such as the Mexican, requires a deep understanding of commercial, financial, land use, economic, environmental, tax and local natural gas market issues.
In that vein, Gadex delivers cost-effective solutions to its clients by performing each of the activities that guarantee the success of the
development of an energy infrastructure project, i.e.:
Gadex is a Mexican Energy Consultancy Firm which focuses its efforts on providing its clients with strategic services.
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