Take-or-Pay gas contracts and wrong gas hedges can put you in the red. As an example, many European energy players during '10-13 struggled financially because t

Take-or-Pay gas contracts and wrong gas hedges can put you in the red. As an example, many European energy players during '10-13 struggled financially because take-or-pay + high agreed gas prices (while 50% cheaper on spot) coincided with a dip in demand, a double whammy for any utility. Note how on the Energy Future Holdings situation, it's the trading/generation business that suffers i.e. EFH. The distribution business (i.e. Oncor), which was part of the original TXU acquisition was spun off as an independent, more resilient business (due to the regulated nature of income). Personally, KKR/TPG/GS is to blame big time for this - the acquisition financing has killed the company. They over-leveraged a highly volatile business (volatility in commodity prices + demand volatility), and this acquisition raised many eyebrows in its day.