Polar vortex: How will it affect your utility bill?

As reported in Christian Science Monitor

By             David J. Unger, Staff writer / January 8, 2014

The polar vortex gripping the nation is as unpleasant for utilities and grid operators as it is for you. What does the polar vortex mean for your next utility bill?

What happens when much of the nation simultaneously reaches for the thermostat and turns up the heat? Energy prices rise.

With Americans shivering through a “polar vortex,” utilities and grid operators are scrambling to meet demand amid record low temperatures. A stressed power grid and constrained natural gas pipelines are already pushing up the price of electricity and natural gas on wholesale markets.

The good news is that consumers are relatively insulated from the polar vortex’s temporary price shocks (besides the obvious cost increase of turning the heat up for a prolonged period). The bad news is that if this is the first polar vortex of many to come, that prolonged grid strain and need for new infrastructure will almost certainly make its way into the bottom line of your monthly utility bill.

“Most retail customers are set up through regulated natural gas rates for this reason – so that short-term spikes in the spot price don’t automatically flow through,” says M. Tyson Brown, statistician at the US Energy Information Administration (EIA). “To the extent that this is a long-term trend – that really affects the price people pay.”

Sticker Shock

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

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

Chance of Snow

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

Annual Electric Auction Helps Determine Rates for NJ Utilities

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.

The Rumbling Started………

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

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

 

 

george@hbsadvantage.com

 

Visit us on the web www.hutchinsonbusinesssolutions.com

Overview of electric deregulation in NJ

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

 

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.

Most in Pa. avoid shopping for electricity supplier

By Andrew Maykuth

Inquirer Staff Writer

Pennsylvania electricity customers are skeptical they can save much by
shopping for power.

Although 88 percent of customers say they are aware they can switch to
alternative suppliers, only 45 percent have shopped, according to a statewide
survey conducted by Terry Madonna Opinion Research.

Twenty-three percent of residential customers statewide have switched,
according to the Pennsylvania Public Utility Commission. About 1.4 million
customers have switched.

Madonna and several electricity suppliers told the PUC on Thursday that
nearly a year after Pennsylvania’s retail utility deregulation went into full
effect, the public remains wary of shopping.

“There are a fair number of people who did not look into changing an electric
supplier because they didn’t believe there would be long-term savings in it,”
said Madonna, director of the Center for Politics and Public Affairs at Franklin
and Marshall College in Lancaster.

The poll results were presented Thursday at a PUC hearing on competition.

The surveys found that price was the main concern driving customers to
switch, but many said the perceived savings were insufficient to make them
switch.

Suppliers said some residential customers have recorded savings up to $300 a
year.

Madonna, who conducted his telephone survey of 801 customers in September on
behalf of Constellation Energy, said 78 percent said they would consider
switching if they could save 10 percent on their generation charge.

Many customers who declined to shop said they were happy with their current
supplier regardless of the cost.

Madonna’s findings were echoed by an Internet survey of 450 customers
conducted by AlphaBuyer, a Paoli group- buyer that markets online.

Forty percent of the customers said the savings were not worth it, said Kevin
McCloskey, AlphaBuyer’s chief operating officer. About 24 percent said shopping
was too confusing or the choices overwhelming. About 15 percent said switching
was too risky or that it was a “scam.”

Under Pennsylvania’s Electric Choice law, customers can choose a company that
markets the power. Billing is still conducted by the incumbent utility company,
which collects a fee for distributing the power.

Customers who don’t switch are still supplied by the utility at a default
rate.

Only 18 percent of customers had visited the PUC’s website for choosing a
supplier. PUC members said more customer education was needed.

“It’s perplexing to us with all the tools being made available to customers
we only see 20 percent of the residential customers shopping,” said Robert F.
Powelson, PUC chairman.

Our Perspective:

HBS has been dealing in the deregulated energy market for over 10 years. I have always been suspect of the proposed residential savings in this market.  Most of the time you are offered a floating rate that may offer minimal savings.

The opposite is true in the commercial market. There are providers offering fixed price alternatives that offer a great opportunity for savings. HBS has found great success in the PA commercial deregulated market. We represent all the major providers selling electric in the PA market.

There is no upfront cost. Deregulated savings in the energy market has been a welcomed windfall for any business in both the New Jersey and Peennsylvania market who willing to look at the opportunity.

 

Read more: http://www.philly.com/philly/business/20111111_Most_in_Pa__avoid_shopping_for_electricity_supplier.html#ixzz1ddcYbDS5