Dereguation…Time to Get Onboard

August 23, 2010

The deregulated utility market has presented a great opportunity for savings over the last year. For the first time in 3 to 4 years, market prices have been less than the providers’ prices, aiding in a windfall to those looking to save money on utilities.

 If you have been tracking natural gas prices, you would see that the market has dropped close to 20% since the end of June 2010.

 Natural Gas

With the steady fall of natural gas prices, HBS has been advising clients to float the market index position to take advantage of the current market prices. If you are a PSEG customer and chose to float the wholesale market over the past 12 months, you would have realized a 17% savings. Not bad!!!  South Jersey Gas clients would have saved 8%.

When speaking to our clients, we still offer an option to fix the price for a 12-month period, however it doesn’t make too much sense to fix a price that is actually higher than the price to compare that the clients have been paying over the last 12 months. Why is the price higher? Because the future market still shows that prices will go up.

Some clients may choose to fix the price for they want certainty in their cost. They do not want to be effected by market fluctuations. However if you lock the price, you are unable to change the price should the market continue to go down. By floating the market index, you can take advantage of the lower price and should the market turn and start to shoot up, you will have the option to lock in a price at a later option.

Electric

The electric market is directly affected by the natural gas market prices for 30% of electricity is generated by natural gas. So natural gas is commonly used as a market indicator. With the current fall of natural gas prices, electric prices continue to fall and have become even more competitive.

The electric market is completely different than the natural gas market. While natural gas prices change monthly with the local provider based on market conditions, the electric prices are fixed from June till May.

Every February, the state holds an auction for those selling electricity in New Jersey. The local providers buy electricity on the open market and blend the results with the electric it has purchased over the last 2 years. So the current market prices that the local providers charge are based on a blended price from purchasing electric over the last 3 years. They take these results and then present a proposal to the BPU (Board of Public Utilities), as to the summer rates (June till Sept) and winter rates (Oct to May) they wish to charge. Both the summer rates and winter rates have defined on-peak and off peak pricing.

As a result each account is charged differently based on their usage. A company with more off peak usage will actually be paying less than a company whose prime usage is during the daytime when on-peak charges are used.

Fixing your electric cost in the deregulated market offers a flat rate pricing no matter when you use it. This has offered a great savings opportunity due to the current market downturn. HBS clients are realizing saving from 10% to 20% on current flat rate pricing.

Should you like to know more about saving in the deregulated utility market, email george@hbsadvantage.com or call 856-857-1230.

2 Responses to “Dereguation…Time to Get Onboard”

  1. Awesome blog I loved reading your info

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  2. LeupoldEst said

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