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Gold/Mining/Energy : Big Dog's Boom Boom Room
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To: excardog who wrote (2447)6/27/2001 11:34:55 PM
From: energyplay  Read Replies (1) of 206184
 
A number of years ago, some Canadian gas producers entered long term contracts with PG&E in California for
natural gas. Price went down, PG&E went to court to break the contracts,California court upheld PG&E.

The Canadian companies (mostly in Alberta) took a big hit.

Douglas Fant remembers the details.

I can remember seeing it in the local paper, and it didn't smell right to me.

Now the Canadians built the Alliance pipeline to the Midwest, instead of California.

So for hedging, frequently you want a 3rd party with deep pockets (like a money center bank) AND use multiple 3rd parties, so if one flakes, you're not dead.

I think you can also buy hedging insurance for counter party failure.
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