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
Yearly Electricity Auction Yields Mixed Results for NJ Consumers
February 8, 2013
As reported in NJ SpotLight By Tom Johnson, February 8, 2013 in Energy & Environment
The state yesterday announced the results of its annual electricity auction, a process used partly to determine utility bill prices, and the outcome was decidedly mixed in a market some thought would deliver more savings to consumers.
At a time when natural-gas prices are near historic lows, the auction yielded savings for residential and small commercial customers for three of New Jersey’s four electric utilities, with prices dropping by 3 percent to as much as 5.4 percent, effective June 1. It is the fourth year prices have dropped for residents and small businesses.
That’s the good news.
But for larger commercial and industrial customers, prices basically doubled for the electricity they will need, according to a consultant for the state Board of Utilities, which conducted the auction over the past few days. For both residents and larger customers, any increases apply only to the portion of the bill covering the cost of generating electricity, which accounts for about two-thirds of the cost paid by ratepayers.
The contrast in auction results reflects changes in the energy market since the state deregulated its electric monopolies in 1999, and explains partly why even with the steep drop in the fuel that sets the price for electricity, consumers in New Jersey still pay some of the highest energy bills in the nation.
Here’s why:
The BPU no longer controls the price of producing the electricity consumers get from suppliers; the federal government decides how much utilities will earn on transmission projects they undertake; and the PJM Interconnection, the regional operator of the nation’s largest power grid, regulates how much suppliers will earn for making sure the lights don’t go out. On top of all that, the state’s efforts to promote solar energy also are boosting costs, as the BPU conceded in a press release announcing the results of the auction.
The state blamed the surprising large increase for industrial customers on a rise in capacity payments to power suppliers, which ensure there is enough electricity in reserve to maintain reliability on the power grid. Those capacity payments jumped by 65 percent from the prior year, according to the BPU.
That was of little comfort to business lobbyists.
“That’s an awful large increase,’’ said Hal Bozarth, executive director of the Chemistry Industry Council of New Jersey. “It’s a clear signal to me the auction system is broken in many places.’’
The vast majority of industrial and commercial customers, however, have contracts with so-called third-party suppliers, which are not affected by the jump in prices in the most recent auction, BPU officials noted.
The doubling of prices to industrial customers only applies to the relatively few establishments that have not switched from their incumbent utility.
“It’s disturbing,’’ said Stefanie Brand, director of the New Jersey Division of Rate Counsel. “It’s definitely going to have an impact on them.’’
Other factors contributed to the mixed results in the most recent auction.
For Public Service Electric & Gas, the state’s largest utility with more than 2 million customers, more than the three other utilities combined—prices for residential and small-business customers were essentially flat.
Its customers will see their monthly bills rise by 6 cents a month, an increase largely attributed to the billions of dollars the company is investing in new transmission projects ordered by the regional grid operator and the Federal Energy Regulatory Commission. Those projects could lower electric bills in the long run by easing congestion on the power grid, which spikes electricity costs, and bringing more power into the capacity into the state, according to PSE&G spokeswoman Karen Johnson.
The state, however, has contested many of the incentives handed out by FERC, which has rewarded PSE&G with much higher rates of return on a handful of transmission projects, much more than the utility receives for maintaining its distribution lines, which deliver power from substations to homes and businesses.
“We’re not saying we don’t need transmission,’’ Brand said. “But they can earn a fair return on them without earning excessive returns.’’
The price of electricity per kilowatt hour for PSE&G customers in this year’s auction was 9.218 cents per kilowatt hour, almost a penny more than the prior year, Brand said. “Some of these numbers are moving in the wrong direction,’’ she said.
The state is also trying to address the rising costs of capacity payments by giving subsidies to new power-plant developers, a controversial strategy under attack from both incumbent power suppliers and the PJM.
Nonetheless, three new power plants, one without any state subsidies, are due to begin supplying power in 2015 — too late, however, to drive down costs for this year and next.
Citing the increase in capacity costs, Brand said the auction results show “graphically when efforts have been made to increase investment in new generation and why residents will benefit from it.’’
BPU President Bob Hanna, in a conference call with reporters to discuss the auction results, said it is very hard to predict what is going to happen with natural-gas prices, the main driver in setting electricity prices.
“For now, I see a period of stability,’’ he said.
And for now, some consumers will see a drop in bills. According to the BPU, customers of Atlantic City Electric will see their monthly bills drop by 5.4 percent, or $6.42 cents a month; for Jersey Central Power & Light customers, there will be a decline of 3 percent, or $2.91 per month; and Rockland Electric customers will see their bills dip 5.3 percent, or $6.74 monthly.
For more information call 856-857-1230 or email george@hbsadvantage.com
Hutchinson Business Solutions………Smart Solutions for Smart Business
Annual Electric Auction Helps Determine Rates for NJ Utilities
January 31, 2013
Low prices for natural gas used to fuel power plants may help keep down rates.
By Tom Johnson, January 31, 2013 in Energy & Environment as reported in NJ Spotlight
For the past four years, consumers and many businesses in New Jersey have enjoyed a rare occurrence — a drop in the price of the electricity delivered to their homes from power plants around the region.
Might the trend continue? More will be known by the end of next week when the state Board of Public Utilities holds its annual online auction to purchase most of the electricity needed to power millions of New Jersey homes and businesses.
The results of the annual auction play a big role in determining whether electricity prices fall or rise each June in a state saddled with some of the highest energy costs in the nation.
But in the increasingly complex energy market, the auction is not the only factor: Transmission prices continue to rise and the state has increased the amount of electricity that power suppliers are required to buy from solar-energy systems, which costs more than electricity produced from more conventional power sources. Those and other factors can wipe out any savings achieved in the auction.
The auction typically involves the expenditure of more than $7 billion in ratepayer funds, although that amount may drop given the number of customers who have switched in the last year.
For the most part, state officials and industry executives were reluctant to predict the outcome of this year’s auction, but the general consensus was there should not be a drastic change in consumer prices, given the continued relatively low cost of natural gas.
‘’I don’t think there will be any major swings,’’ said Jay Kooper, the New Jersey chairman of the Retail Energy Suppliers Association, a group representing power suppliers who try to offer customers cheaper electricity than that supplied by the state’s four electric utilities.
With the steep drop in natural-gas prices, Kooper’s members have been much more successful in luring customers away from the state’s utilities, which buy the power they need to supply their customers in bulk in the annual auction held by the BPU. The cost of generating that electricity generally amounts to about two-thirds of a customer’s bill, with most of the rest of the cost tied to the expense of delivering the power over a utility’s transmission and distribution lines.
Natural-gas prices are still historically low, but they have bumped up a bit since last year, according to Tancred Lidderdale, a senior analyst at the Energy Information Administration, an arm of the U.S. Energy Department.
“Natural gas prices are still low, but they are not as low as last year,’’ Lidderdale said, noting that the price of the fuel, which is largely used to power generating stations in the region, was about $2.40 last January in one sector; prices were running at about $3.29 in future contracts in the same sector this month.
The price differential should not have a big impact on the New Jersey auction because of the way state regulators have structured it. Last year, prices for electricity purchased from the power suppliers fell from 1.1 percent to as much as 6.4 percent, depending upon the utility supplying the electricity.
Critics, however, said the price drops could have been steeper if the state’s utilities were not locked into the present system of buying electricity. Under that system, the utilities buy one-third of the power they need for customers each February. By doing so, they avoid the possibility of their customers be hit with huge price spikes when natural-gas costs rise rapidly, as happened during Hurricane Katrina.
The downside is that when natural-gas prices fall, customers do not gain the savings very quickly from their utilities, which has prompted more and more customers to shop around for cheaper energy rates. By the end of December, about 15 percent of more than 3 million residential customers had switched electricity suppliers, way up from the 5 percent who had switched in February.
New Jersey Division of Rate Counsel Director Stefanie Brand, who has argued for changes in the current auction structure, said the lower natural-gas prices may offset other factors driving up costs for consumers.
“Hopefully, it will be good news for consumers,’’ Brand said in a telephone interview. “I would love to see prices go down, but I can’t say I know what’s going to happen.’’
Hal Bozarth, director of the Chemistry Industry Council of New Jersey and a frequent critic of the state’s energy policies, said he would expect prices to go down, given the low natural-gas prices. “I’d be sadly disappointed to see prices go higher,’’ he said. “The rates are so high they are a disincentive for economic development.’’
In New Jersey, energy costs for the industrial sector usually rate as sixth- or seventh-highest in the country, about 60 percent higher than the national average, according to Bozarth.
Kooper, who said the state’s system of buying power needs some structural changes, remained hopeful. “I think there will be opportunities to shop for electricity,’’ he said.
Brrrr!
January 22, 2013
If you are heading out
In the next couple of days
You will see that winter…
Has finally come to visit us
The Highs are expected…..
In the low 20s
Adding the wind chill factor…
You will feel like it is…
In the single digits
Be sure to grab your scarf and gloves
And
Don’t forget to put a hat on…
It is said that….
You lose 90%
Of your body heat…
Thru your head
I thought that fact was recently….
Proven to be false?
A scientist did a study and found
There are no facts to support it
I said put a hat on…
Don’t you know there is a…..
Flu Epidemic going on
Do you want to listen to someone…
Experimenting on heat loss
Thru the head
Or
Be sick in bed for a week
I also heard…
There was a cold snap….
In California recently…
I saw student athletes
Having to wear sweat pants and gloves
To soccer practice
Because it was 55 degrees out
Can you image that?
Poor kids……
With all this cold weather rushing upon us
I checked to see how
The deregulated energy market
Has reacted
It has been relatively…
Unfazed
Yea it’s cold….
But there has been no extended
Cold temperatures
The deregulated
Natural Gas and Electric
Market prices..
Although not at the floor…
Have only risen slightly
And are still near….
A 10 year low
Starting off the New Year
Looking for savings
You will definitely find it….
In the…..
Deregulated Energy Market
Give us a call to find out more
And don’t forget…
To put a hat on
Smart Solutions for Smart Business
For more insight email george@hbsadvantage.com
Visit us on the web http://www.hutchinsonbusinesssolutions.com
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
Overview of electric deregulation in NJ
April 28, 2012
As reported by Save on Energy.com
New Jersey
Electric:
New Jersey opened its electricity industry to competition in 1999. Each of the four electric utilities (PSE&G, Jersey Central Power & Light, Atlantic City Electric and Rockland Electric) now offer customers the chance to save money by shopping for the supply portion of their electric bill.
The utilities sold off their power plants, and now only own the transmission and distribution wires, while also providing “backstop” power to customers who do not shop for electricity. With the move to competition, New Jersey utilities have separated their service into two parts:
• Regulated distribution of power, which is still only provided by the utility, and • Supply of the electric commodity, which is open to competition.
Customers can choose to receive their electric supply from their utility, or an alternate energy provider.
Customers who do not choose an alternative energy provider are served on each utility’s Basic Generation Service (BGS). The price for Basic Generation Service is determined annually through auctions held by the utilities.
For large customers above 750 kW, called the Commercial and Industrial Energy Pricing or CIEP class, the BGS price is set at hourly prices in the wholesale PJM market. These prices can be extremely volatile, so most large customers choose an alternate (or third-party) energy provider for price stability.
Customers under 750 kW are known as the BGS Fixed Pricing Class, and receive a flat, annual rate from the auction, although it may be seasonally adjusted.
Customers who choose an alternate energy provider still have their power delivered to them by their local utility, and contact their utility for all outage reporting. Customers can choose to receive either a single bill from their utility for their delivery service and energy supply service, or can receive two bills, one from each company.
Our Perspective:
Natural gas prices are near a 10 year low. Because 30% of electricity is generated with natural gas we have seen very competitive in this area also.
Deregulation gives the consumer a choice to buy their energy supply on the open market at wholesale prices as oppose to buying energy from the local provider at default prices that are normally higher. If you are not currently buying energy thru a 3rd party provider, it is something you should take the time to look at. Businesses and now residential clients are finding substantial savings by fixing the cost of their electric and natural gas supply cost.
To learn more email george@hbsadvantage.com
Natural gas prices rise, benchmark oil up slightly
April 28, 2012
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
April 24, 2012
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……..
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
November 21, 2011
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 30th
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.