Sticker Shock
March 7, 2013
Just when everything
Seems to be going along
Quite well
There always seems to be something
That snaps at you…
That brings you back to reality
In this case
I am speaking
About electric supply prices
Over the past year
Electric prices have been at…
Their lowest level
In the past 4 to 5 years
There were times I would have to
Double check with our providers
To verify the prices were correct
That is how low they were
Then came January 2013….
PSEG is doing an upgrade of their
Network Integration Transmission System
To the grid
This has proved to be very costly
And the Federal Energy Regulation Commission
Has agreed to allow this cost
To be a pass thru cost
To anyone buying electric in PSEG territory
It is known as the NITS
And
This has added anywhere from
3 to 5 mils onto the supply cost
3 mils ( 3/10ths of a penny) or
5 mils ( a ½ a penny)
Doesn’t sound like much
But multiply it by your annual Kwh
Add it adds up very quickly
On top of this…
As the demand for electricity increases
The companies generating the electricity
Are asked to generate enough electricity
To ensure there is enough electricity
In reserve…
To maintain
Reliability on the power grid
The generating companies said
No problem
But it is going to cost you more
As a result…
To maintain the capacity needed
For reliability
The capacity payments jumped 65%
From the prior year
This cost also
Has been tacked onto
The electric supply cost
We have seen this add an additional
5 mils….
Even up to a penny
To the supply cost
These additional costs
Effects all commercial and industrial users
Whether they buy electric from the local providers
PSEG or AC Electric
Or
They are buying electric from a
3rd Party deregulated provider
The deregulated electric market
Is still offering a better opportunity
For savings
Over the Local provider supply cost
But there is sticker shock
We find the clients saying….
Yeah……
But our cost has been……
For the last year or two
I guess it was too good to be true
Don’t let the events described scare you
We keep using more electricity
Thus the demand for electricity increases
There are still real opportunities
For savings
It is just that the bar has risen for everyone
We are finding the best savings opportunities
In the longer term electric renewals
This softens the 65% capacity increase
For capacity cost return
To their prior level of cost
As of Jun 2014
To learn more….
Feel free to contact us
Chance of Snow
February 6, 2013
Seems like this is the one phrase
We have been hearing a lot
Lately
Here it is the beginning of February
And we have had no…
Major accumulations
I love hearing the
Projected winter snowcast
They give back in October
By our calculations
We see several cold fronts
Moving thru
Over the next couple of months
With these cold fronts…..
We see several major storms
Being caused by the El Nino
Now sitting
In the Pacific Waters
Total projected accumulation
During the next couple of months
Will be….
Drumroll please…
From 25 to 35 inches
A few years ago
We almost hit the
25 inch mark…
The week after Thanksgiving
In fact we had 3 major storms…
Bringing over 50 inches of snow
By New Years
I wonder what they said that year?
This year
Ho Hum…
Where is the snow?
I feel sorry for all the people
Who ran out and bought
Brand new snow gear
Seems to be just….
Taking up space
Remember when we used
To go out
And buy snow tires?
Whatever happened…
To snow tires….
Or did you used to put….
Chains on your tires?
Meanwhile…
It seems the cold
Has finally
Settled in
The deregulated energy market
Has remained…
Fairly stable
There are still
Great opportunities
For savings
In the natural gas
And electric markets
If you have been hesitant
To look at these deregulated opportunities
This is a good time to….
Dip your toe in the water
You will like what you see
I wish I could say the same
For the gasoline market
The price of gasoline
Has jumped over 30 cents…
Just in the last few weeks
People are no longer saying…
Fill it up
With regular
It’s back to….
Can I have $20 of regular
There is speculation
That gas prices may even
Make the push
To the dreaded…
$4.00 per gallon mark
Over the next month or so
That will make for a
Long summer….
Driving
Back and forth
To the shore
How many times
Will we have to stop for gas
If we keep getting…
$20 refills
Supply and demand
They have the supply
And we demand…
Lower prices
Will we ever see gas….
Under $3.00 again
Here’s hoping
We are doing our best
In the deregulated energy market
Saving our clients’
Thousands of $$$$$
Does anybody
Know someone…
In the refinery business…
We could all use some
Savings on the road
For more insight contact george@hbsadvantage.com
Smart Solutions for Smart Business
The Rumbling Started………
January 7, 2013
Back in September
Right after Labor Day
Future forecast show
We are in for……
A cold winter
Thus began the long trudge….
Natural gas prices
Started inching up
In October
The drumbeats started
Beating louder
Forecasts are calling
For a cold winter
Natural gas prices
Inched up
A bit higher
All this was happening
As Natural gas storage levels
Remain at….
An all-time high
Future supplies are poised
To make the US
The world’s largest
Natural gas supplier
New finds and
Refined extraction methods show
We have over 100 years
Of natural gas reserves
November starts….
The drums keep beating
Forecast show that it is
Going to be
A cold winter
Prices inch up a bit higher
All the while
We have been experiencing
Higher than normal temperatures
Here it is January 2013
We have had some cold weather
But no long term stretches
Of cold weather
They are already forecasting
That beginning next week…..
A warm front will be coming in
And hanging for a couple of weeks
All this has created a
Natural gas market
Phenomena
The index
(The base cost of natural gas
To all providers)
Started to drop
So much for the higher prices
HBS has been working with our clients
Keeping them apprised of the opportunity
For the savings this presents
The basis (transportation cost)
Is inverted
That means the longer you go out
The less expensive it is
We have never seen this
In the 12 years we have been
Servicing the deregulated market
By locking in a
3 to 4 year
Basis position
Clients have been able
To add more certainty
To their future
Natural gas cost
This will allow the client to
Concentrate on managing the cost
Of the Nymex
ie: (gas out of the ground)
During the highest usage months
November thru March
For most clients
That is when 75% of their
Annual natural gas usage
Is consumed
Feel free to contact us…..
To learn more about
How you are able
To save in the deregulated
Natural Gas and Electric markets
Start the New Year off with Savings
That will always bring a
Smile to your face….
Hutchinson Business Solutions
Smart Solutions for Smart Business
For more insight contact george@hbsadvantage.com
Visit us on the web http://www.hutchinsonbusinesssolutions.com
Inching Up
June 1, 2012
While everyone has been keeping
Their eyes on gas pump prices
The big question
Will it go over $4.00 this summer?
Natural gas has been making its own mark
After nymex prices
Hit a 10 year low
In late April
We have seen the Nymex prices
Run up
Over 25%
During the last 30 days
You may have heard me say before….
You don’t know where the floor is
Until you passed it
We watched a slow steady fall of the nymex
Over a long period of time
Once it got to a point
Where investors may have thought
It may be…..
Too low
It shot up
Was it a market correction?
Analyst start talking about possibilities
Of having a hot summer
That will increase demand…
For 30% of the electric is generated
From natural gas.
Prices inch up
They also start looking at
Hurricane reports
That could affect the wells
In the Gulf of Mexico
Prices inch up more
They have even started to cap
Some of the natural gas wells
Hmmm
Supply / Demand
Cut down on the supply
That will get the
Prices to inch up
Higher
Market prices are still very competitive
It just that…..
In this market
Timing is everything
Natural gas and electric prices
Are still very competitive
If you have not participated in deregulation
Now is the time…
To lock in on the savings
Under contract
Now is the time to start looking
To lock in your renewals
To all HBS customers
Please take my phone call
To learn more contact
Visit us on the web www.hutchinsonbusinesssolutions.com
What’s Up?
March 24, 2011
I say potato.
You say patato.
The difference may be just an inflection
Or the pronunciation of the word
(in this case it was my spelling, so you get the gist)
However, we all know what we are discussing.
Shame that the same thing cannot be said
About the word…….
Deregulation……
We should all know what we are discussing
We should all be on the same page…..
But there are so many stories……
Each one providing the best deal……..
A once in a lifetime offer……
Get in on the ground floor…….
What is going on????
With electric prices being at a 7 year low
We are finding, that everyone and their brothers,
Are now selling energy………
I get calls at my office almost….. everyday
Would like to switch electric providers?
How would you like to earn some extra cash?
The market is being inundated.
I am surprised Comcast and Verizon are not selling energy?
HBS has been selling energy to commercial clients for over 10 years
I would like to take a few moments to add our perspective.
Define what we see as the opportunity.
Educate our clients and friends.
Business
- The deregulated electric market price is closely tied to natural gas pricing.
-
- Thirty ( 30%) of the electric generated in the US is made with natural gas. Therefore, natural gas is a good indicator of the market prices.
- Natural gas market prices are the lowest they have been in the last 4 years.
-
- As a result, the deregulated market price of electric has also dropped.
- Many experts think that we may have hit the floor on natural gas prices back at the end of October 2010.
-
- The market has gone up and down several times since then, but it has never gone back to the low point recorded on October 25th, 2010.
This information indicates that clients should be looking to lock in or fix the price of electric with a 3rd party deregulated provider for a minimum of 1 year…… possibly 2 years.
We have actually seen instances where the 2 year fixed price is more competitive and offers more savings.
Each account is unique. Prices are all based on demand factors.
Are you a seasonal account?
(Highest usages during summer months)
Do you use most of your energy during the day?
(On Peak….when prices are higher)
Or do you have mixed usage?
(On Peak and Off Peak)
All these factors play into defining the deregulated market rate for your account.
Do you have annual usage demands
vs seasonal usage demands……
Your fixed rate will be lower.
(your demand usage is being spread out over the entire year)
Is your usage a mixed between on peak usages and off peak usages
vs only using power during the day,
when rates are the highest
Then your rates will be lower.
Each provider has their sweet spot. A client profile, they are most competitive with in that market.
HBS is an independent energy management consultant. Thru our strategic partnerships, we represent all the major deregulated gas and electric providers selling energy in deregulated states.
Our expertise is the ability to properly define the market and select the provider(s) who will bring the most competitive fixed rate, offering the best opportunity for savings to our clients.
What about Variable rates?
There are many companies now offering variable rates for electric.
Month to month contracts….offering savings of around 10%.
If the market prices are near the bottom,
Why would it not be in the clients’ best interest to lock in a fixed rate instead of floating with a variable rate?
As the summer season starts,
Market rates will also go up,
Due to summer demand.
So will those variable rates!!!!
It only makes sense to lock in on a fixed price,
if the market presents the opportunity.
In the deregulated energy market,
You are dealing with a commodity.
Timing is everything.
Let HBS be your eyes and ears.
Next week, we will outline using an independent broker vs buying online. Also, what does it mean when you say the price is fully loaded
To learn more about deregulated opportunities for your company email george@hbsadvanatge.com
Visit us on the web www.hutchinsonbusinesssolutions.com
Saving in the Deregulated Utility Market
March 21, 2011
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.
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
January 28, 2011
- 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.”
Hutchinson Business Solutions 