Natural gas prices rise, benchmark oil up slightly

By SANDY SHORE, AP Business Writer–8 hours ago

Battered natural gas prices are getting a bit of a break as cooler spring weather raises expectations that demand may improve.

Natural gas rose 6 cents to finish at $2.186 per 1,000 cubic feet in Friday trading. That’s up nearly 15 percent from April 19 when the price hit the lowest level in more than a decade at $1.907 per 1,000 cubic feet.

The price has plunged this year as a natural gas production boom created a glut of supply and demand dropped during a mild winter.

Now, some in the market are suggesting demand will strengthen, which help boost prices.

Cooler weather moving across the Northeast, parts of the Midwest and the Rockies this weekend could prompt homeowners to turn up the heat, creating more need for natural gas.

In addition, utilities have been substituting cheaper natural gas for coal to generate electricity. As much as six billion cubic feet a day of natural gas has replaced coal-fired power generation this year, said Ron Denhardt, an analyst with Strategic Energy & Economic Research. Consumption on an annual basis is about 66 billion to 67 billion cubic feet a day.

In addition, some energy companies have cut production because low prices can make it unprofitable to drill for some types of natural gas.

Yet, several analysts believe any rally will be short-lived.

With May upon us, any pick-up in demand for heating will be brief. About 70 percent of the nation’s demand for natural gas comes during the winter to heat homes and businesses.

Natural gas inventories continue to build. Analysts say that underground storage could be filled to the brim by fall without additional production cuts or an extremely hot summer that boosts electricity demand for cooling.

“It’s fundamentally a disastrous market,” Denhardt said. “I can’t see any turnaround of any significance before November, December of this year.”

PFGBest analyst Phil Flynn said there has to be an even bigger drop in price to force companies to cut more production. He speculated that the price will test an all-time low of $1.35 per 1,000 cubic feet.

In other energy trading, oil prices rose slightly, as traders shrugged off a report that the economy grew more slowly in the first three months of the year as governments spent less and businesses cut back on investment. But consumers spent at the fastest pace in more than a year. The Commerce Department said Friday that the economy grew at an annual rate of 2.2 percent in the January-March quarter, compared with 3 percent in the final quarter of 2011.

Benchmark oil rose 38 cents to end at $104.93 per barrel in New York. Brent crude fell 9 cents to finish at $119.83 per barrel in London. Heating oil lost 1.37 cents to end at $3.1807 per gallon and gasoline futures rose 2.29 cents to finish at $3.2062 per gallon.

At the pump, gasoline prices were little changed at a national average of $3.826 per gallon, according to AAA, Wright Express and the Oil Price Information Service. That’s 8.5 cents less than a month ago and 5.3 cents lower than a year ago.

Copyright ©  2012   The Associated Press. All rights reserved.

Your Attention………Please

Residential electric customers

 

 

In…

 

 

 

New Jersey and Pennsylvania….

 

 

 

 

You finally have an opportunity

 

 

 

To lock your electric supply cost

 

 

 

At a fixed price…….

 

 

 

For a

 

 

 

12 month period

 

 

 

 

 

 

This means saving of

 

 

 

Around 15%

 

 

Off your current

 

 

 

Local provider supply cost

 

 

 

 

 

 

If you look at your PSEG residential electric bill

 

 

You will see your…..

 

 

Price to compare

 

 

For electric

 

 

Is around

 

 

 

$.116 cents per kwh

 

 

 

 

Atlantic City Electric customers

 

 

Your bill shows a

 

 

 

Price to compare of around

 

 

 

$.122 cents per kwh

 

 

 

 

We now have a program that will permit

 

 

 

Residential customers in New Jersey

 

 

 

To lock their electric supply cost for

 

 

 

 

 

 

$.0999 cents per kwh

 

 

 

 

For a 12 month period

 

 

 

 

For a typical household

 

 

This provides savings

 

 

 

Of over $300 a year

 

 

 

 

No additional cost

 

 

No transfer fees

 

 

 

No interruption of service

 

 

 

The supply charges will be billed on

 

Your current local provider bill

 

 

 

Best yet…..

 

 

 

Nothing changes…….

 

 

 

Should you have an electrical problem…..

 

 

 

You still will call your local provider

 

To service the account

 

 

 

 

This opportunity is also available for….

 

 

 

All Residential Pennsylvania

 

 

Electric customers

 

 

 

 

(Contact us to find out your rate…….

 

 

 

Your savings are comparable)

 

 

 

 

 

As most of you know…

 

 

 

HBS has been in the deregulated energy business

 

 

Since January 2000

 

 

 

We have been providing

 

 

This service…

 

 

 

For only the commercial market

 

 

 

 

 

 

I get several calls

 

 

Every  week

 

 

From my clients

 

 

Asking……

 

 

 

 

 

Can you help me with my home electric bill……

 

 

 

 

 

Many have faxed or emailed me…….

 

 

 

 

All the special offers they have been receiving

 

 

 

 

Problem was……

 

 

All I found was……

 

 

 

 

Smoke and Mirrors

 

 

 

 

 

They had the sizzle….

 

 

 

 

No contract…..

 

 

 

Month to month……

 

 

 

Low variable rate……..

 

 

They also had……..

 

 

 

 

 

 

Minimal to no $avings

 

 

 

Many have complained to me

 

 

 

They actually paid more

 

 

Than the provider price to compare

 

 

 

 

 

For the first time

 

 

 

We have found

 

 

 

A Residential opportunity

 

 

 

 

That will provide….

 

 

 

 

 

True savings….

 

 

 

 

For your…..

 

 

 

Residential Electric Account

 

 

 

 

Should you like to know more…..

 

 

 

About this saving opportunity

 

 

 

For your home

 

 

Email……..

 

 

george@hbsadvantage.com

 

 

Or call our office 856-857-1230

 

 

 

 

$300 savings

 

 

 

 

For me…..

 

 

It was the equivalent

 

 

 

Of getting 1 month

 

 

 

Free electric a year

 

 

Visit our website: www.hutchinsonbusinesssolutions.com   to learn more about opportunities available to provide savings.

 

Tonight’s the Night

Tonight’s the night…..

 

Hurricane Swartz makes his long range winter forecast…

 

 

 

You know the guy with the bowtie?

 

 

How cold is it going to be?

 

How much snow will we get?

 

 

Remember last year?

 

We had that big snowstorm right around Thanksgiving…

 

 

What’s going on with this weather?

 

Here it is mid-November…..

 

Janet and I just got our winter clothes out

 

 

 

Dealing in the energy market

 

The one constant we discuss is temperature

 

 

Back in September

 

We were getting reports saying

 

 

 

The long range forecast calls for an exceptionally cold November

 

 

When will that start……

 

 

November 30^th

 

 

 

Those statements kept pushing natural gas prices up

 

 

We held firm….

 

 

We waited….

 

 

We’ll see….

 

 

Here it is mid-November and temperatures are still in the 60s

 

Natural gas prices keep dropping

 

 

A whole market opportunity has opened up

 

 

With prices so low

 

We start to measure risk

 

 

How much lower can prices go?

 

 

 

Don’t you love this kind of stuff?

 

 

 

 

Can natural gas prices go lower?

 

 

Yes!!!

 

But there is more upside risk

 

 

 

With prices being sooooo low,

 

 

 

One cold snap and …

 

 

The market price can jump up fast…

 

 

 

It’s called the whiplash effect

 

 

 

Prices always go up faster…

 

 

And then they take their good old time coming back down

 

 

 

Now here’s my shameless HBS plug

 

 

For those businesses still buying natural gas from their local provider

 

This is a great time to lock into a very competitive fixed price contract

 

 

 

There we go….

 

I said it

 

 

Now the disclaimer…

 

 

Some circumstances may not allow you to qualify

 

            Your monthly usage may be too small

 

                                          or

           

            We find stop service notices on your bill

 

 

 

 

 

Pick it up Hutch

 

 

Let’s get back on topic

 

 

Ohhhhh…..OK

 

 

 

So……..

 

Hurricane….

 

 

What will you say?

 

 

How cold will it be?

 

 

How much snow will we get?

 

 

 

I just bought a new snow shovel last year

 

 

I’ll be ready

 

 

 

PS: This was written on Wednesday. If you want to know what Hurricane said, you will have to go online and Google it.

After switching from Peco, one customer sees the danger of a variable rate

As printed in philly.com

 

LindaPeterson  of West Chester was eager to switch from Peco Energy Co. at the end of last year.
She signed up for an alternative electricity supplier offering avariable rate that would fluctuate depending upon market conditions.

AsPeterson  discovered, variable rates sure can vary.

For a few months this year, Peterson’s rate was very attractive, indeed. But it went up
58 percent from May to June. At 15.63 cents per kilowatt hour – that’s just the
generation charge – her last bill was about $23 more than it would have been had
she stayed with Peco.

“I knew there would be some variation, but that’s just a huge, huge increase,” said
Peterson, who is semi-retired.

A representative from her supplier, Palmco Power PA L.L.C., did not return a phone call about
Peterson’s bill. But its customer-service department, in an unsigned e-mail,
blamed an “unusual” wholesale price spike for the increase.

“Thankfully,however, shortly after the wholesale price increase, wholesale prices dropped,and our
price billed to our customers dropped accordingly,” it said.

In Pennsylvania’s buyer-beware world of deregulated utilities, Peterson can’t do much but switch to
another supplier. Her agreement, like most with variablerates, does not carry an
early cancellation fee.

According to the state Public Utility Commission, a supplier can bill a variable-rate customer
at whatever price it believes the market will bear, even if the customer
originally thought he or she was getting a discount.

A company also can offer different rates to different customers. The variable rate that is
on a customer’s bill does not have to be the same as the initial price posted on
the PUC’s website, http://PAPowerSwitch.com.

“A supplier could have one rate for PowerSwitch . . . while offering a different rate
door-to-door . . . yet a different rate for enrolling by mail,”Denise McCracken,
the PUC’s spokeswoman, said in an e-mail. “They could offer me one rate . . . my
neighbor a different rate (as long as they are not discriminatingon the basis of
race, gender, etc. of course).”

In Pennsylvania and New Jersey, where dozens of electrical suppliers are competing, customers
accustomed to a lifetime of regulated utility prices now face a dizzying array of
choices – fixed rates, variable rates, and”green” rates from renewable-power
generators. Next year, Peco customers will begin seeing rates that vary hourly,
according to the market.

More than 20 percent of Peco customers have switched since Jan. 1. But despite promises of
savings, most residential customers seem unwilling to leave the protective comfort of the regulated utility.

On Monday, the Retail Energy Supply Association launched a campaign to educate customers
about the benefits of switching, but it faces headwinds generated bycustomers such as Peterson, who share their experiences.

“My neighbors are very scared about switching,” said Peterson, a clinical social worker with a
small private practice.

Peterson was an early adopter of electricity choice. She had switched suppliers in the late
1990s, when limited deregulation was introduced into the Peco market. Competitive
suppliers eventually pulled out because they could no longer beat the utility’s
capped rates. But when Peco’s rate limits were lifted at the endof 2010,
competitive suppliers returned en masse.

Peterson signed up with Palmco, the marketing arm of a Brooklyn fuel-oil dealer, which posted a
price on the PUC’s website. She liked the company’s low-key marketing,compared
with the blustery direct-mail appeals she received from bigger suppliers.

“The fact that they weren’t doing a lot of heavy marketing, I guess I trusted them
a little,” she said. “I didn’t expect them to escalate the price like that.”

According to a review of Peterson’s bills, Palmco’s rate was very generous during the first
few months. It charged her an introductory rate of 5.78 cents perkilowatt hour,
clearly a below-market 42 percent off Peco’s rate. But by May,Palmco’s rate had
increased to 9.91 cents – just about the same rate Peco was charging.

And then in June came the whopping 58 percent increase – to 15.63 cents per kilowatt hour.
Peterson averages about 475 kilowatt hours a month.

The owner of Palmco, Robert Palmese, did not return a phone call. But his
company’scustomer-service department offered this response:

“Our family has been in the energy business since 1938, 73 years. We know from experience
that it is always in the best interest of our customers to keep prices for energy
as low as possible.”

In an interview in October, Palmese offered reassurance to customers who might consider
his company.

“We have very casual marketing,” he said. “We’d like our customers tolike us. Just try
us, you may like us.

“You are always free to leave.”

 

Our Perspective

HBS is a independent deregulated energy management consultant. We have been providing deregulated energy solutions to our clients since 2000. We have heard stories like the one experienced above, countless times.

While the energy market prices are at their low point, it would be smart to lock into a fixed price contract for natural gas or electric for a minimum of 1 year but also be willing to look at the 2 year option. Fixed priced contracts normally provide a 10% to 15% savings under what Peco ic currently charging.

Do not be fooled by the variable rate options.

It is a good marketing ploy….

no contract…

month to month float….

But you will only pay more in the long run.

 

To learn more about deregulated opportunities for yopur business email

george@hbsadvantage.com

Visit us on the web www.hutchinsonbusinesssolutions.com

Online Auctions

The deregulated energy market is causing a big buzz in this area. In the spring of 2010, NJ opened up deregulated opportunities to the residential market.

In January 2011, PA opened up the Peco territory to deregulation after a 5 year moratorium.

As the result, the market has been flooded with companies and individuals trying to capitalize on these opportunities.

Online Auction opportunities are now available. All you have to do is type buying deregulated energy online into your Google page and you will have multiple selections.

Also many companies have been promoting a Multi-level marketing approach to set up a grass roots effort in hopes of gaining penetration in the market.

.

As more consumers have grown more comfortable with on line purchasing, it seemed natural that this avenue would be an effective marketing option.

The only problem we see is that when buying energy in the deregulated market, you are dealing with a commodity. This puts a whole new spin on the opportunity.

This week, we would like to take a look at on line auctions.

Below is a plus-minus list we have developed to help you make an objective decision about purchasing energy on line versus using an independent broker.

On Line Auctions:

Plus

• Feel like you are getting a good deal by participating in an ecommerce transaction
• Potentially lower price by doing the ecommerce transaction 
• Potentially easier transaction since there is limited contact with 3^rd party energy suppliers
• Electricity is a commodity and customer’s management feels this is best process for doing transaction

 

Minus

• Can be more challenging to negotiate terms & conditions  
• Potentially less leverage with suppliers since there is no personal interaction
• Difficult determining what factors are included in the price.
  •  Is it fully loaded? (contains 7% loss transmission and sales tax)
  •  Is it a fixed rate or variable rate?
• How do you know when is the best time to buy
• Online auctioneers are brokers approaching the same providers we would be using.
• Many on line auction companies do not have any information on their website regarding the management of the company

 

Dealing with an Independent Broker (Hutchinson Business Solutions)

 

Plus   

• We represent all the major 3^rd party providers selling energy in deregulated sates
• We offer personal service, individually marketing your account to these providers
• We monitor market fluctuations and discuss timing with our clients
• We offer fixed price solutions (Other options available for large volume users)
• We make sure all prices received are fully loaded and are an apples to apples comparison to your local utility’s price to compare
• Due to our business relationships, we bring leverage to the deal
• We assist with customer’s legal team in negotiating the business terms of the contract as they may apply
• We provide options, defining the best terms and conditions and service the account throughout the term of the contract, addressing issues as they arise
• We have been advising customer risk management strategies in the deregulated markets for over 10 years.
• Opportunity to outsource many of the tasks involved with the energy procurement process while retaining the control and final decisions on any potential transaction

 

Minus

• The energy market is in a growth mode, many new faces and the information is sketchy.
• You must be sure to deal with a reputable company who will represent your best interest
• Many of the new companies are offering variable rates

 

At first glance you may think this overview is biased.

Yes, we are an independent broker. We take pride in the value we have brought to our clients in the deregulated market.

We have just seen too much abuse. The deregulated energy market is an unknown.

We take time to explain how the market works with each client. We want you to understand this concept and feel comfortable with your purchase.

Each account is unique. There is no one size fits all solution.

There are great opportunities for savings in the business market.

Know the facts!!!!

Look to ask the right questions.

Let HBS be your eyes and ears….

While you continue to do what you do best….

Run your day to day business.

To learn more about deregulated energy opportunitiews for your business email george@hbsadvantage.com

Visit us on the web www.hutchinsonbusinesssolutions.com

Saving in the Deregulated Utility Market

Note: With the current deregulated market opportunities now being presented to many business that qualify, the market has been inundated with new sales personnel. I found this article provides on objective overview of questions you should ask and details you should know before making a decision.

There are many companies offering variable electric rates. I would not recommend this solution at this time.

With natural gas prices being the lowest they have been in the last 3 or 4 years, there are great opportunities to lock into a fixed price electric contract for a 1 or 2 year period.

By Carl Shaw

With the deregulation of energy in many parts of the US, competition is now allowed between energy companies to provide electricity at discounted rates directly to their customers. These Energy Service Provider Companies (ESCOs) are licensed by individual states and are required to adhere to the applicable regulatory guidelines set by the Public Service Commissions (PSC) or Public Utility Commission (PUC).  Customers (end-users) also have the opportunity to work with electricity brokers or consultants who can compare different offers and provide additional services to help manage your monthly energy spending and costs.

If you are a business spending a minimum of $3000 a month  on your electric or natural gas bill, you may qualify to choose your electric or natural gas supplier in deregulated markets, which could create savings opportunities. Companies that can control or manage their electric consumption to use more electricity in the off-peak hours will find the greatest opportunity for savings. In deregulated markets, you now have a choice and can choose lower energy rates without any risk or local service change.

Your local energy service providers buy natural gas and electricity on the open market at wholesale prices based on the current market conditions and then bill their customers at increased rates to include margins and/or service fees.

Independent Deregulated brokers can put your company in a competitive position by leveraging extensive buying power to help you develop energy supply procurement programs. They can conduct an unbiased rate and tariff analyses that may result in substantial savings to you. 

Due to the current economic conditions and the complications deregulation has caused there are many new energy advisory companies popping up, so be sure to know all the facts before making any decision.

When choosing a qualified utility tariff analysis & rate optimization firm to represent you, you should be aware of a few things:

First, be sure that the price you are quoted from your local provider includes all charges. Should you be talking to a consultant or broker, make sure the price is “fully loaded” meaning, does it include the 7% loss allowance (to deliver 100,000 kWh of electric, the providers must actually send 107,000 kWh, for there is a 7% loss in transmission)? Also does it include the local sales tax?

In PA, you must also ask if the price includes GRT (gross receipt tax) and RMR (reliabilty must run). RMR is a pass thru charge from the provider that allows them to meet peak demand periods when they must use additional resources to meet this demand. This is normally found during the summer months.

All these important components should be included in the quote from your deregulated provider to make an accurate comparison. These components are included in your price to compare from your local provider.  Often, companies will provide a low end quote without including sales tax and a load allowance. Be sure you are comparing apples to apples. Often when these figures are included, their real quote is much higher.

Does the company providing your quote have an Energy Information Management System in place, to make sure that you are getting the best available rate?

Are they shopping your account to more than 1 provider. Each provider has a sweet spot (a market they are most competitive in). An independent broker who knows the market will be able to identify these providers and work to get the best price.

Information is power. Knowing what questions to ask will save you time and money.

There are opportunities to save from 10% to 25% in the deregulated electric market depending on your usage patterns.

When making a final decision, know that you are dealing with a commodity and timing is everything. Market fluctuations may happen on a daily basis.

Best Time

When is the best time to buy energy in the deregulated market?

I have heard statements from clients saying, “Let’s wait to July or August and then we’ll look at it.”

This seems to be a common misconception. When buying a commodity, we are dealing with a fluid market.

Prices are constantly changing.

During the last 4 years, we have seen the Nymex go from a high of $13.105 in July 2008 to a low of $2.843 in September of 2009.

What is the Nymex?

The current price of natural gas out of the ground in the Gulf of Mexico to the shores of Louisiana.

When quoting fixed natural gas prices we must add the basis cost, which is the cost of transporting natural gas from the shores of Louisiana to the gate of the local provider (PSEG, SJ Gas, PGW, Peco  etc).

The Nymex is normally used as a gauge to determine where the natural gas and electric markets are at any given point of the day.

Nymex is up, means that gas and electric prices will be increasing

Conversely,

Nymex is down, means that gas and electric prices will be dropping.

This is not necessarily a proportional shift but it is a good indicator.

I went back over those 4 years and looked to see when the Nymex was at its’ highest and lowest points.

Year        Average Cost        Lowest   Month   Highest   Month

2007       $6.376 dth            $5.43      Sept        $7.558    April

2008       $8.437 dth            $6.469   Nov        $13.105   July

2009       $3.475 dth            $2.843     Sept      $6.136     Jan

2010       $3.908 dth            $3.292     Nov       $5.814     Jan

Our goal at HBS is to properly monitor the market swings and to communicate with our clients when the opportunities present the best value.

Dealing with a utility is not like dealing with other contracts in business.

You do not have to wait for the contract to expire.

There is no guarantee that the best opportunity will be available.

As of this writing the Nymex is at $3.93 and it is only mid-February.

Could the market go lower?

Yes..

But there is more of an upside risk!

Prices could easily go higher.

 

How much lower will the market go?

The floor is not determined until it passes

And then it may be too late.

When dealing with a commodity….

Timing is everything!

I often say that a client who buys deregulated utilities is like a person who shops at Syms.

“An educated consumer is our best customer.”

HBS strives to educate our clients and keep them informed,

Providing…

Smart Solutions for Smart Business

If you would like to know more about deregulated utilities and your business call 856-857-1230 or email george@hbsadvantage.com

Why Businesses Should Use an Electricity Broker to Shop For Electricity

 November 30th, 2010 Adam Ebner

As reported in Nationwide Deregulated Energy News

In a very competitive marketplace, energy deregulation gives businesses better control of their business electricity costs. Aside from that, there are myriad other benefits and option that their companies would get from a deregulated and competitive energy market – options that were not possible in the past due to high energy expenses and limitations set by the monopolized energy industry.

The deregulation of the many utilities markets gave birth to the emergence of several retail electric providers all competing for subscriptions from both residential and commercial energy users in the state and in energy deregulated cities such as Philadelphia, Pittsburgh, New York City, Chicago, Washington DC, Houston, Dallas and many others. Now given the power to choose, selecting from over 50 retail electricity providers can be a daunting task indeed; with businesses finding themselves at the losing end should they fail to choose the best provider for their needs. This is why businesses should work in partnership with certified electricity brokers to negotiate in their behalf the best electrical rates, payment schemes and other amenities from the various Texas electric companies.

Electricity Brokers:

Your Helping Hand Unlike electricity management at home, businesses have more complex processes and operational needs for electricity that if not managed would find them dealing with extremely high energy costs that would eventually affect their bottom line. Electricity brokers can come into the picture and help businesses find ways on how they can efficiently use Texas electricity and help them minimize their energy costs. These brokers deal and negotiate electrical rates with retail electric providers for the benefit of the business.

No matter what business or industry your company may be in, electricity brokers can provide professional services using up-to-date information of the energy market in a bid to obtain the best commercial electricity deals for the company.

Why Should You Use Electricity Brokers to Shop Electricity?

Businesses may not have the resources available to have an independent study or analysis of the various retail electric providers offering commercial electricity before they switch and commit to the services of one. Aside from this, companies may have to deal with all the other elements in the very complex energy market such as new regulations, changes in fees, penalties, reduction of carbon emissions, etc. Hiring an electricity broker can spare the company from all these, so that all their staff and resources can focus on only one thing – doing business.

Electricity brokers can help companies with their procurement decision, eliminate possible over payments, recover over payments, management of energy consumption, and continuous energy usage analysis. Electricity brokers can uncover and identify areas in the business processes where they can implement significant improvements. These brokers are not in any way tied up with any major retail electric provider, allowing them to give unbiased advice to businesses and help them get the best energy solutions for their companies.

Our Perspective:

Hutchinson Business Solutions (HBS) is an independent energy management company. We represent all the major providers selling deregulated energy in deregulated states. We will do a full analysis of your account and shop your account with our  providers to find the best value and savings for your company.

HBS clients are finding savings from 10% to 20% in the deregulated utility market.

To learn more email george@hbsadvantage.com

Making It Easier for Consumers to Comparison Shop for Electricity

Trade group looks to revise “price-to-compare” system that helps customers make informed choices about independent power suppliers

 

By Tom Johnson, January 28 in Energy & Environment |

With residential customers finally switching electricity suppliers, a trade group representing independent power companies is hoping the state revamps billing and other procedures to make it easier for consumers to shop for a cheaper energy.

For the first time since the state broke up its electric monopolies more than a decade ago, residential customers and small commercial operations have some choices about who supplies the power to light their homes and businesses.

Because of a steep drop in natural gas prices and the way the state buys electricity, independent power suppliers have an opportunity to undercut the price that public utilities offer customers.

“The big story on the retail electricity side has been the emergence of residential and small commercial markets,” agreed Jay Kooper, New Jersey state chair of the Retail Energy Suppliers Association, a trade group representing so-called Third-Party Suppliers (TPS).

Falling Prices

Until natural gas prices fell, more than 99 percent of residential customers elected to stay with their incumbent electric utility to buy their power, a fact that generated criticism of the state’s deregulation law. Other power suppliers found it hard to beat the price of the incumbents, in part because fuel costs had been rising and the state mitigated those spikes by buying power in chunks over three years, which tended to moderate those increases.

But when natural gas prices began falling more than a year ago, suppliers could undercut the price offered by the state, with some offering price discounts of up to 15 percent on the supply portion of customers’ bills. Nearly 100,000 customers have switched as of November, according to the most recent data compiled by the state Board of Public Utilities (BPU).

With customers looking around for options, the big question for third-party suppliers is how do they sustain the business, especially if natural gas prices begin rising.

To Kooper, the answer is to revamp the state’s policies in two key areas: how to deal with customers who fall behind in their bills and owe the third-party suppliers money and the so-called price-to-compare, a mechanism set up by the state to help customers shop for new suppliers.

“We need to dive into the nuts and bolts of the retail market to keep it sustainable for the long term,” Kooper said, noting the changes his group is seeking have already been adopted in other states with deregulated energy markets.

Gaining Momentum

Board of Public Utilities President Lee Solomon, who ordered the stakeholder hearings on the issue, said he is trying to take advantage of the momentum created by new suppliers coming into the market and make it easier for them to compete with the incumbents.

Without changes, Kooper said the suppliers will be subject to a “boom and bust” cycle when natural gas prices rise as they most inevitably will. What the suppliers are seeking is a level playing field to compete with the utilities, he said.

Along those lines, the group is advocating requiring the utilities to purchase the suppliers’ account receivables, or unpaid customer bills. Kooper argued such a change would be fair because utilities are already are protected from uncollected bills by a surcharge, which allows them to pay off those bills.

The group is also seeking to establish a uniform price-to-compare system because each of the four utilities uses a different scheme to help customers compare prices, according to Murray Bevan, counsel to the group.

“As retail markets evolve, it’s very important that price-to-compare is as close to an apples-to-apples comparison as possible,” Kooper said. “Without these mechanisms, it makes access to the smaller customers trickier and riskier.”

About Deregulation

As presented on PSEG website

Before Deregulation 

Prior to New Jersey’s restructuring, PSE&G was responsible for generating electricity, transmitting the power to all regions of their service territory, distributing the power to the individual homes and businesses, and billing and service issues.  In addition, they were also responsible for all repairs to the electric lines and equipment.

After Deregulation

As a result of the New Jersey Energy Choice Program, the different responsibilities of the utilities were “unbundled” and the power industry was separated into four divisions: generation, transmission, and distribution, and energy services. The generation sector has been deregulated and, as a result, utilities are no longer the sole producers of electricity. The transmission and distribution sectors remain subject to regulation – either by the federal government or the New Jersey Board of Public Utilities.   No matter which electricity supplier you choose, PSE&G will continue to service the transmission and distribution sectors of your electricity.

Competition is allowed between companies to provide power at discounted rates and superb customer service directly to customers. These companies are licensed by the state of New Jersey.  You also have the opportunity to work with an electricity broker or consultant who can compare different offers and provide additional services to help manage your energy spending.

In most cases, PSE&G will continue to send you your utility bill.  So the only thing that changes if you shop for a better rate is that better rate.

Out Perspective

Deregulation has presented a great opportunity for savings in the business sector. If you are a company spending a minimum of $5000 a month on electric and you are not taking advantage of this opportunity, feel free to give us a call and we will present an overview. 856-857-1230

Or, if you would like to know more about deregulation opportunities for your business email george@hbsadvantage.com

HBS has been providing independent deregulated energy management solution to our business clients for over 10 years. We represent all the major deregulated energy providers selling energy in deregulated states.

Visit us on the web www.hutchinsonbusinesssolutions.com