Crius Energy Trust Tr Unit CRIUF

Business Model

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Crius has a deceptively simple-looking business model. They sign a contract with a customer to deliver an unlimited amount of electricity or gas over a certain period. Then they sign a lower cost, corresponding contract with a supplier. However, the supplier won't agree to providing an unlimited quantity. If the weather is unusually nice, and Crius uses too little, they may have to pay up anyhow under a take-or-pay provision. If the weather is extreme, then Crius has to buy additional electricity or gas at outrageous spot prices. So making accurate predictions of future demand is an important aspect of their business, and they hire consultants who provide that modeling. So far the results have not been satisfactory, and it has cost unitholders dearly. 2013 was a disastrous year for Crius, no matter how Q4 turns out. As for the current Q1, it will certainly be interesting to see if they profit from the extreme cold. Crius' natural gas business is a small part of their sales, which may turn out to be a blessing if they were again caught on the wrong side of the contract.