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Wells Fargo Offers Electricity Price Hedging, Renewable Energy Credits for Middle Market Companies

Posted on: Wednesday, 1 August 2007, 12:04 CDT

SAN FRANCISCO, Aug. 1 /PRNewswire-FirstCall/ -- Wells Fargo & Company said today it will offer electricity price hedging to middle market companies to help them manage their power costs.

The hedging program -- believed to be the first offered by a major U.S. bank to middle market companies -- can benefit companies spending at least $1 million annually on electricity and also help them purchase environmental management products, including renewable energy credits, to reduce their carbon footprint and offset greenhouse gas emissions.

"As electricity costs continue their long-term upward trend, managing power costs can often mean the difference between profit and loss for many small and medium-sized companies," said Anil Suri, managing director in Wells Fargo's Financial Products Group. "All middle market companies depend on having reliable, affordable power, but many do not have in-house experts or the time to effectively manage electricity market risk. We now offer that increasingly vital service using the same disciplined approach Wells Fargo brings to its customers in other areas of financial risk management every day."

Just as interest rate and commodity hedging can protect a company's cash flow and budget from volatility, electricity hedges can help a company manage electricity pricing in concert with its physical supply contracts. "Our goal is to provide well-researched and clearly structured, cost efficient financial hedges against electricity price exposure, based on a company's geographic power consumption profile," said Suri. "We work with customers to understand their exposure and design hedging programs that allow them to manage through significant electricity price volatility across several budget years."

Hedging gives companies greater control over both short- and long-term electricity costs and protects them from potentially large year-over-year fluctuations in the price of electricity. "The program has been designed to help take the guessing out of unexpected and erratic short-term changes in the cost of energy," said Suri. "It also enables companies to focus on transitioning to renewable energy sources and energy-saving business practices."

"Wells Fargo has been at the forefront of bringing best risk management practices to middle market customers in the capital and commodity markets," said John Shrewsberry, executive vice president in Wells Fargo's Specialized Financial Services Group. "Addition of electricity hedges to the suite of products offered by Wells Fargo is an example of our continued commitment to help customers manage risk."

In addition to electricity, Wells Fargo offers interest rate, equity, credit, natural gas, metals, fuel and agricultural risk management products to its wholesale customers.

Renewable Energy's Hedging Role

As part of the program's offerings, companies looking for ways to go "green" can purchase renewable energy credits (RECs), with financing from Wells Fargo that also supports the renewable energy industry. "RECs contribute to the development of new renewable energy sources such as wind, solar, geothermal and small hydroelectric by enabling companies to purchase the green attributes of the electricity generated by these sources," said Suri.

According to the U.S. Environmental Protection Agency's Green Power Partnership program, at year-end 2006, Wells Fargo was one of the nation's largest purchasers of renewable energy. More than 40 percent of Wells Fargo's electricity nationwide is offset with wind power. The company also supports the development of new renewable energy sources through financing and other investments.

About Wells Fargo

Wells Fargo & Company is a diversified financial services company with $540 billion in assets, providing banking, insurance, investments, mortgage and consumer finance through almost 6,000 stores and the internet (wellsfargo.com) across North America and internationally. Wells Fargo Bank, N.A. is the only bank in the U.S., and one of only two banks worldwide, to have the highest credit rating from both Moody's Investors Service, "Aaa," and Standard & Poor's Ratings Services, "AAA."

Wells Fargo & Company

CONTACT: Susan Stanley, +1-415-947-3994, for Wells Fargo & Company

Web site: http://www.wellsfargo.com/

Source: PRNewswire-FirstCall

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