Veggies 4U’s Energy Pricing Dilemma

摘要

Veggies 4U is a young and dynamic family-run greenhouse: Lucy and her husbandrun the business with the help of a small group of friends and colleagues who serveon the company’s Board of Directors. Lucy is preparing a report to the Board torecommend a natural gas supply contract for the next three years. The company hasreceived four different contract offers, ranging from a simple forward contract, to amaximum cost contract with a price floor. The case focuses on the pricing and riskmanagement opportunities offered by an integrated North American natural gasmarket. Lucy has to assess the different supply contract offers received by thecompany and to reverse engineer them in order to benchmark their cost with that ofpotential synthetic alternatives Veggies 4U could build. Once Lucy has decidedwhat to recommend, she has to sell it to the Board.