When a commercial or industrial buyer asks for an electricity price, the supplier quotes off the offer side of the wholesale market and adds a risk premium to hold that price for the remainder of the day. The buyer pays for the supplier’s uncertainty and signs. There is a smarter structure that most buyers are never shown. It is called a strike price agreement, and for buyers who believe prices have room to move lower, it consistently delivers better outcomes.

1. What a Strike Price Agreement Is

A strike price agreement is a contract structure in which the buyer sets a target purchase price below current market levels. The buyer signs the agreement and returns it to the supplier, who is then authorized to execute at that price at any point within a defined window, typically 30 days. The supplier can only act once the signed agreement is in hand, which means the buyer retains full control until they choose to commit.

Once the agreement is signed and returned, the supplier does not need to return to the buyer before executing. When the market reaches the strike level and the supplier acts, the buyer receives confirmation and the contract is locked. The buyer retains the right to cancel or modify the strike price within a defined notice period throughout the window, so the structure remains flexible even after signing.

2. Why It Delivers Better Pricing

When a buyer asks for a price under standard execution, the supplier quotes off the offer side of the wholesale market and embeds a held price risk premium on top. That premium compensates the supplier for committing to a price for the remainder of the day against a market that can move against them at any moment. The buyer absorbs that cost entirely. The supplier is reactive and pricing defensively.

A strike price agreement changes the supplier’s position entirely. Instead of holding an offer, the supplier now has a working bid. They can be proactive when market conditions move toward the strike level rather than managing risk against a clock. The held price premium is no longer needed. The bid to offer spread and the eliminated risk premium together are worth $0.75 to $1.50 per MWh to the buyer, a material savings on any meaningful load over a multi-year term.

3. When It Makes the Most Sense

Strike price agreements deliver the strongest value under specific conditions:

• The buyer has selected a supplier but believes current market pricing is elevated and expects movement lower within the window
• Near term supply, demand, or weather fundamentals support a realistic downside case
• The buyer has enough runway before contract expiration to let the window play out without a hard execution deadline
• The organization wants to capture market timing advantages without taking on open ended price exposure

4. EnerNova Was Built for This

EnerNova was founded by energy traders. We have sat on the desk, worked bids in live markets, and built a firsthand understanding of how suppliers price risk into retail electricity contracts. That background is why we can structure strike price agreements with confidence and why our clients consistently capture better economics than standard execution.

Through exclusive arrangements with our supplier partners, EnerNova clients have access to strike price agreements that are not broadly available in the market. We use proprietary models built on non-public market data to determine whether a proposed strike price is realistic and to monitor whether it should be reached during the window. That intelligence is how we set the right target and make sure the agreement delivers.

If you are approaching a contract renewal or believe current electricity prices have room to move lower, contact EnerNova to find out whether a strike price agreement is the right structure for your situation. We know how this market works. We will help you buy smarter.

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