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.

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

Deflated

It was a tough weekend.

First, the Phillies; expectations were high. We were supposed to win. 

Did anyone tell the Giants? Either someone forgot or they were not listening. I have been accused of that; it is called selective hearing. Most husbands have been accused of that. 

Either way the Boys of Summer loss their mojo and could not even come up with hits. Especially when runners were on the bases. Think of how the game ended. Runners on first and second; 2 outs; down by 1 run and Ryan Howard works up a 3-2 count. 

Now what were we all taught way back in little league? 

This goes back to basics! When you have a 3-2 count, you protect the plate. You swing at anything that could remotely be called a strike. You don’t look at a 3^rd strike!

 After all the ups and downs thru the season, we end up feeling deflated.

 Wait till next year. Spring training starts in 103 days. This may be of little solace.

 What happened to this year? The season seems to have ended prematurely.

Well, we can always turn our attention to the Eagles. They have been on a roll, 4-2 going into Sunday’s game with Tennessee.

 Kolb….Vick……….Vick…Kolb

Seems like a good problem for Andy Reid to have? They have both elevated their game and are playing at a high level. Can they remain healthy?

The defense has been putting pressure on the quarterback, controlling the run and not allowing the other teams gain any momentum.

The receivers seem to be having a protective shield around them. Taking the ball downfield, sometimes almost scoring at will.

That was until yesterdays’ 4^th quarter disaster against Tennessee. 27 points? Don’t you love when they start playing the prevent defense? A recipe for disaster, bend; don’t stretch. Who came up with that defense anyway?

For Philadelphia fans it was a weekend that took the wind out of our sails. It left all the diehard fans feeling deflated. The old kick in the gut never seems to feel good but we keep coming back.

There’s always next game, next week, next season.

Philly….don’t you just love it?

Now you may be thinking why is he talking about philly sports and how does the word deflated tie into HBS?

Good question.

Most of the time when you think of the word deflated it tends to have a negative connotation. However, for us, the word can be seen in a positive context.

When the utility market is deflated, that means the commodity (natural gas and electric) market prices are down, which translate into savings for you, the client.

How much has the natural gas price index dropped?

From its’ high of $14.34 a decatherm in July 2008, it has slowly dropped over 70% during the past 2 years. In October 2010, the index was $4.12 a decatherm.

Pretty amazing!

Where’s the bottom? Some analysts think we may have neared the bottom and prices will start inching up, especially now that winter is just ahead of us. However, should we see warmer winter temperatures prevail, we may see prices drop even further.

HBS has been advising our clients to take advantage of the downside.

You may choose to lock in on a price for a 1 or 2 year term, thereby protecting yourself from market fluctuations or you may choose to float the market index and take advantage of the current downside savings.

With falling natural gas prices, you will also see this will reflect in lower prices for the deregulated electric market prices.

Why you may ask?

Well, 30% of the electric in the US is generated by natural gas. So natural gas seems to be a natural indicator on electric prices. As natural gas prices go down, so do electric prices.

If you are a business spending a minimum of $5000 a month for either natural gas or electric, you should be looking at the savings being found in the deregulated market.

Since deregulation started in the late 1990’s, the local providers were told they could no longer be in the supply business. You may choose to get your natural gas or electric from a 3^rd party provider or you may continue receiving your supply from the local provider at a default price which is normally higher than the deregulated market price.

Many of our clients find out they do qualify and are taking advantage of this deregulated opportunity.

If you like to know more, email george@hbsadvantage.com

We know that the economy has been tough on business. However, HBS has found a silver lining by bringing deregulated utility saving to our clients.

To find out if you qualify, all we need is a copy of you latest natural gas or electric bill from your local provider. We will also need a letter of authorization that will allow us to pull the annual usage for your account(s). With this information, we will be able to validate what you are currently paying and present what opportunity for savings may be available for you.

Now is the time to take deflated utility prices and let them work for you.

Let the savings fall to the bottom line!

You may find it brings a smile to your face.

I Think We Just Dodged a Bullet

I think we just dodged a bullet! Last week the meteorologists were having a field day tracking this massive storm that was supposed to hit the east coast. High winds, heavy rains. Normally, when we get a bye, the storm sweeps out into the ocean. This storm actually went inland, west of the I95 corridor. Sad to say, they did get substantial flooding.

Why am I talking about the weather, you may ask? Because this is my article, I can choose a topic. Seriously! … Because weather plays a very big part of monitoring natural gas commodity cost.

The current natural gas prices are still the lowest they have been in the last 4 years. September’s NY Index price (the price that providers buy gas) was $.39 cents a therm compare this to $1.41 in July 2008. Quite a difference! Why, you may ask?

First of all, natural gas storage levels continue to be at a 5 year high. Add to that, the shale natural gas that been found in western PA. They are saying this could provide natural gas to the US for the next 100 years.

It is the old supply and demand theory, until the market deems it appropriate to ignore.

For now, market activity show that this is a great time to be buying gas in the deregulated natural gas market. Remember, that since deregulation, the local providers are no longer in the supply business. Therefore they charge you a default rate, which in normally higher. They buy natural gas wholesale and bill their customers’ retail.

HBS puts our clients in a wholesale position. Our clients are finding saving from 10% upto 20+%, depending on who your local provider is.

Since 30% of the electric is generated from natural gas, it also plays an important influence to the current market electric prices. They are also at a 4-year low.

To qualify your commercial natural gas or electric bill should be a minimum of $3000 a month each. Many of our clients are finding substantial saving in the deregulated utility market.

Should you like to know more about savings in the deregulated natural gas and electric market email george@hbsadvantage.com or call 856-857-1230.

JCPL Summer Rate Savings

June 3, 2010    as reported by electricitywatch.com

On June 1, new summer default rates went into effect for all New Jersey customer s being serviced by JCPL (Jersey Central Power & Light) who are still on the utility’s price to compare default rate.

While residential competitive electric providers remain limited in the state, there are roughly two dozen competitive electric suppliers offering lower rates for commercial and industrial customers compared to the JCP&L default price to compare rate.  Business customers in the GS rate class will pay a rate of $0.115462 from June through September of 2010, and then pay $0.110205 from October 2010 through May 2011.  Current fixed competitive electric rates in the area are in the low $0.10s per KWh resulting in savings for most businesses between 8-14%.

Default rates in JCPL are derived from auctions the utility performs in previous years for the current year.  Due to lower natural gas prices, current market rates for electricity are lower than the current default rates resulting in saving opportunities for businesses.

For more inf0rmation on Jersey Central Power and Light competitive rates, send an email to george@hbsadvantage.com .

How to Save Money by Switching Utility Providers

    

One of the easiest ways to save money these days is to switch utility providers. Recent increases in the cost of energy are astonishing and finding a competitive deal is a must. There’s hot competition in the utility markets with many companies competing on price alone, as services are otherwise the same across the board.

Apples to Apples

Current market conditions have opened the door to many new faces selling energy in NJ and PA.  The difficulty is to properly define all the ancillary costs in order to present a true comparison of your current cost and the true savings that will be realized during the term of the contract.

Hutchinson Business Solutions (HBS) is an independent energy broker and has been defining saving opportunities in the deregulated natural gas and electric market for the past 10 years. We represent all the providers selling energy in New Jersey and Pennsylvania.

10% to 50% Savings

Though each account is unique, many of the deregulated providers have what they consider to be their sweet spot (their most competitive market).

Because of our strong personal relationships with the providers we are able to more accurately identify the right provider/s for you.  This enables us to present a specific proposal outlining your current cost and all the deregulated utility opportunities available.

We understand your time restraints.  We have an excellent streamlined procedure that makes the whole process simple and easy.  All we need is a copy of your latest provider invoice with a signed letter of authorization, which allows us to pull the annual usages on your account(s).

All the savings fall to your bottom line

There are no costs associated with our service. We receive a small residual from the provider during the term of your contract.

To qualify, your monthly energy costs should be a minimum of $5,000 for electric and $3,000 a month for natural gas.

To find out more, email george@hbsadvantage.com or call 856-857-1230.

You may also visit us on the web to learn more about savings in the deregulated utility market. www.hutchinsonbusinesssolutions.com

Why Do Natural Gas Rates Change?

As reported by Public Service Commission of Wisconsin

HBS has been an independent energy broker for the last 10 years. Many times we are asked why the natural gas market can be so fickle and prices vary so widely from day to day. Below is an overview I found that may help shed some light on the subject.

Let us know your thoughts?

Consumers are sometimes surprised when they open their natural gas bills. The rate that their local utility charged this month could be 25 percent higher than it was just last month. That same rate, however, could at the same time be 30 percent lower than it was last year. This leads some consumers to wonder what is going on at the utility. The fact is that natural gas price changes are driven by several different factors, some of which the utility has control over, and others it does not. Some of these costs are subject to regulatory oversight while others are not. Some of these factors change infrequently and in small increments, while others swing widely from month to month. Still others vary by the season.

What causes natural gas price changes?

What is the wellhead price?

Why is the commodity price so unstable?

What do utilities do to insulate customers from volatility?

What are interstate pipeline costs?

Are pipeline rates constant from season to season?

How does increased winter usage affect pipeline capacity costs?

Are there other reasons that a natural gas rate changes?

What are local distribution service rates? 

 What causes natural gas price changes?

Changes in natural gas prices are caused by five principal factors. Natural gas rates change when there are: 1. Changes in the unregulated wellhead or commodity price of natural gas 2. Changes in the overall level pipeline demand charges approved by the Federal Energy Regulatory Commission (FERC) 3. Changes in the period of collection of pipeline demand charges approved by the Wisconsin Public Service Commission (PSC) 4. Special circumstances such as pipeline refunds 5. Changes in local distribution service rates approved by the PSC

What is the wellhead price?

The price of gas at the site of production is referred to as the commodity price or wellhead price. Of all the cost components, natural gas commodity prices are by far the most unstable and the least predictable. Figure 1 shows monthly wellhead prices of natural gas from 1999 to 2009. It is clear that these prices move around quite a bit from month to month and from year to year. Natural gas price volatility is among the highest of all commodities that are traded on major market exchanges. The price can unexpectedly double in a matter of months. It can also tumble by 50 percent just as fast.

Why is the commodity price so unstable?

The natural gas commodity price is so volatile because it is a market price, not a regulated price. Market forces reflect the underlying supply and demand situations. Since there is no regulatory oversight a sudden unexpected cold snap can send prices soaring. Conversely, an unexpected decline in the price of competing fuels, such as oil, can cause industrial customers to use much less gas than expected and the price of natural gas can decline precipitously. Figure 1 shows monthly prices. The daily prices are even more volatile.

What do utilities do to insulate customers from this volatility?

Utilities buy gas in the off-season and store it for winter use The principal method is to buy gas in the off-season and store it for winter use. The principal reason that storage services are used is because the pipeline system in our part of the country was designed so that a stored gas inventory is required if the utility is to satisfy its customers’ total demand. The resulting price hedging impact is, therefore, more of an ancillary benefit from the use of storage rather than the primary reason for using it. If gas is put in storage in the summer and withdrawn in the winter, the cost of gas charged to consumers in the winter will be a blend of the current market price and the cost incurred when buying in the summer. This blending tends to have a limiting effect on the price volatility to some extent. It is far from perfect insulation, however. When natural gas prices rise or fall dramatically, consumers will still see noticeable changes in their gas rates. Since on any given day Wisconsin gas utilities can meet only a fraction of their gas demands with supplies from storage, they are always buying relatively large amounts of gas at market prices. Therefore, even if storage services are used to their maximum capacity, market price changes always filter through to the prices paid by the ultimate consumers if no other action is taken. Utilities use financial instruments The other action than can be taken to reduce price volatility is a relatively recent development in natural gas markets. Futures, options, and swap contracts for natural gas traded on the New York Mercantile Exchange provide a means to hedge natural gas prices. Proper use of these contracts allows the utilities to lock in prices or to put ceilings on prices, for example, which limits the volatility of gas costs that flow through to consumers. The goal of using financial instruments is generally to control price volatility, not to speculate on the future direction of energy prices or not even to reduce gas costs. The utility’s cost of administering its hedging program is passed on to consumers so that, over a long period of time, a hedged gas supply portfolio will tend to produce slightly higher gas prices than if the portfolio were not hedged. The prices will, on the other hand, be more stable and more predictable. Whether the increased cost justifies the reduced volatility is a matter of personal opinion. However, more of the Wisconsin gas utilities have decided to use this approach as energy prices have become more volatile since 2000.

What are interstate pipeline costs?

Interstate pipeline costs represent the space (capacity) on the pipes, that transport natural gas. Pipeline costs are much more stable than are commodity prices. The overall level of pipeline charges changes very little from year to year. Occasionally, the FERC sets new pipeline rates that must be flowed through to consumers, but in most years the pipeline rates are fairly constant.

Are pipeline rates constant from season to season?

Generally no. The PSC requires most of the state’s gas utilities to recover more of its charges for pipeline service in the winter than in the summer. Why does the Commission do this? Increased demand in the winter, not the summer, determines whether the utility must contract for new pipeline capacity. There is plenty of space available on the pipeline in the summer so that even if everyone installs natural gas fired grills for summer barbecues, the utility simply runs more gas through its space on the pipe. So customers who increase usage in the summer cause the utility to incur commodity costs, but not pipeline capacity costs.

How does increased winter usage affect pipeline capacity costs?

The same cannot be said of customers who increase their winter usage. If numerous customers convert from, say, fuel oil to natural gas for home heating, the utility must make sure that it has enough space on the pipeline to meet the increased demand. If it does not, it will have to arrange for more space on the pipe. Who should pay for the increased pipe capacity, the customers who installed gas grills for summer usage or the customers who installed gas furnaces? Those that installed the furnaces clearly caused the need for the new capacity, so from a cost-causer / cost-payer perspective, those customers should pay for that capacity. To link cost-causer with cost-payer, the PSC requires utilities to use a seasonal pricing approach to collect pipeline costs. The concept is shown in Figure 2 below. The winter period runs from November through either March or April, depending on the utility. The important point to note is that pipeline charges increase by about $0.10 per therm on November 1. This is a hefty increase for most consumers. This means that even if commodity costs are stable from October to November, gas bills are likely to rise noticeably once October ends. Figure 2

Are there other reasons that a natural rate changes?

Natural gas rates can change due to reasons that occur irregularly. For example, in recent years several Wisconsin utilities were required to pass back to customers a refund of pipeline costs. Other utilities might be allowed to or required to pass on to consumers slight surcharges or credits based on their performance under gas cost incentive mechanisms. It is difficult to know when and if these types of costs might be incurred. In any event, they tend to be quite small relative to the commodity, interstate pipeline, and distribution service costs.

What are local distribution service rates?

These rates reflect the utility’s cost of maintaining and operating its local system for distributing natural gas to homes and business. It is surprising to many consumers that the portion of the business fully regulated by the PSC, namely the basic distribution business, is usually not the culprit when it comes to significant natural gas price changes. These costs are, like interstate pipeline rates, fairly stable from year to year. Unlike interstate pipeline rates, however, local distribution rates do not vary by season. These rates change only when the PSC has a formal rate proceeding for the utility. In most cases, these rates are not changed more frequently than once every two years.

**There are many factors that cause natural gas price changes We hope that it has been clear that there are numerous forces acting on natural gas prices. Some are market forces. Others are institutional forces such regulatory decisions by the PSC or FERC. The combination of all these determines the price that Wisconsin consumers pay for natural gas service.

Deregulated Gas Savings

As reported by Energysop

Deregulation of utilities means that the historical monopolies granted to a few large utilities providing electricity, telephone and natural gas are eliminated. These companies will just operate the distribution systems, the wires and the pipes. Competitors then enter the market with different pricing and service offerings. With the onset of deregulation in all of these industries, it is possible for consumers to realize significant savings by shopping around for these commodities.

 Utility deregulation is complicated since there is a fixed and very expensive distribution system already in place – pipelines, power and phone lines. It’s just too expensive, disruptive and environmentally harmful to construct parallel distribution systems. This is different from deregulation of airlines or financial services where no such fixed infrastructure existed. As a result, only the commodity, gas, electricity or telecom, is deregulated.

Natural Gas Deregulation

Historically, consumers received supply and delivery of natural gas from a single company who had the monopoly franchise for the region in which they lived. These companies bought gas on the wholesale market and sold it to consumers in their jurisdictions according to regulated rates set by the local regulatory agency, an energy board or public service commission.

 Natural gas is being deregulated in many jurisdictions. Examples are, Ontario, Alberta, Maryland, California, Georgia and Pennsylvania. This means that a householder or business can buy gas directly from a supplier at a competitive price — not just from the gas utility. These utilities, however, continue to have the franchise to distribute gas and charge a regulated fee.

Deregulation separates the sale of the gas as a commodity from it’s distribution. The product is available at a competitive price and under competitive conditions but the delivery is a standard regulated charge. This would be similar to a situation where you might buy milk by phone, and it is delivered by a large courier service such as Federal Express. The milk is a commodity, and it would be priced differently between suppliers, but the supplier relies on a distribution system provided by Federal Express trucks. A portion of what you pay would be for the commodity (milk), and a portion for the distribution (Fed Ex). In the case of utilities, the distribution will remain regulated, but the commodity supply will be a free market.

 Experience in Other Jurisdictions

The U.S. initiated deregulation in the gas industry at the wholesale level in the mid 1980s which resulted in gas prices declining about 35 per cent for large commercial and industrial customers, according to a Harvard University study. Prices for residential consumers changed only slightly.

Agents, Brokers and Marketers (ABMs)

Consumers choosing to shop around for their natural gas supplies can benefit from the price swings and variations inherent in a competitive energy marketplace. But where do consumers go to buy natural gas? Deregulation has given rise to a number of sources of gas supply.

 First, you can continue to let your distributing utility purchase gas on your behalf and deliver it to you with no change in the process.

 Or you can look into purchasing it from an agent, broker or marketer. These are independent companies that either sell on behalf of gas producers or purchase supplies of gas and re-sell it to consumers. Securing a long term supply from one of these energy marketers when the gas prices are lower can result in significant savings over the term of your contract.

 Should you choose to buy from a gas marketer, nothing about your service will change. You will still get a bill from your distributing utility which will indicate a regulated Delivery Charge. This is about 1/3 of your bill and a Gas Supply Charge which is the remaining 2/3. The delivery charge will be kept by your distributing utility and the gas supply charge will be forwarded to the gas marketer or supplier you chose. Should you choose some value-added services offered by gas brokers, such as energy cost comparisons, rental gas equipment or an equipment service contract, these will also be added to your bill. If you switch to a gas marketer, there is no interruption of service nor any other additional fee charged.

 This cost split is a key point to remember when you are comparing costs or considering an appeal from one of the gas suppliers or marketers. You have no doubt received promotional materials from one of these either by phone, by mail or from someone knocking on your door. The suppliers, brokers and marketers are only dealing with 2/3 of your bill. The distribution charge, which is 1/3 of your bill, is fixed and regulated by regulatory boards. They have periodic hearings to evaluate and set this rate. The remaining 2/3 is variable depending on which supplier you choose. As a result, when a promotional message claims a 10% saving, it is referring to 10% of the 2/3.

 Take, as an example a fairly typical annual gas bill of $ 1,500. One third of that, $500, is a fixed distribution charge. The remainder, $1,000, is the gas supply charge. A supplier offering a 10% saving is offering a saving of $ 100, which is 10 % of the $ 1000 gas supply charge. The saving on the total energy bill is 6.7 %, ($100 saving on a $1,500 gas bill).

 Gas marketers offer varying contract terms and conditions. In general, however, you have two basic choices. You can sign on for a single or multi-year contract at a fixed price or you can choose a rebate option which means you pay the regulated price set by your distributing utility and will receive a rebate if your marketer can buy the supply for less than that price.

Our Perspective:

I found this article gave a good explanation of the deregulated natural gas opportunity. If your company is spending more than $3000 a month for natural gas, you should be looking at buying natural gas in the deregulated market. Our clients are saving a minimum of 10% to 15% by buying natural gas in the deregulated market.

Currently yor local provider is buying natural gas in the wholesale market and then selling it to their clients for retail prices. Should you qualify, we are able to put your company in a wholesale position and the savings will fall to your bottom line.

Hutchinson Business Solutions provides independent financial solutions in the dereglated energy market. We have been positioning our clients for savings in the deregulated energy market for over 10 years.

To find our more information, visit our website www.hutchinsonbusinesssolutions.com

or email george@hbsadvantage.com  You may also call 856-857-1230.

What is Deregulation? FAQ

What is an “aggregator”?
An aggregator is a company or association that buys power at a wholesale price from power generating companies and passes the savings on to its customers. Because the aggregator is buying vary large amounts of power on behalf of all its customers, they can negotiate for the best rates on your behalf.

Does taking advantage of the deregulated electricity market require changes in wiring to my business?
None whatsoever. Your new agreement to buy electricity through an aggregator simply requires your local utility (the company that delivers power to your meter) to utilize electricity generated by the companies that sell power wholesale to the aggregator.

Can I take advantage of the deregulated electricity market in my home?
Not at this moment, in most cases. Aggregators need to acquire the bargaining power of larger electricity users to be able to negotiate favorably for their clients. At some time in the future, aggregators may turn to groups of homeowners.

Is there any service interuption when I change my electricity provider?
The change from buying power from your current provider to your new provider is “seamless”, in most cases simply requiring a reading of the meter at the time your new service takes effect. There is usually no need to replace the meter or otherwise interupt your power service. Your aggregator will take care of all the paperwork, contacting the various utility companies, etc.

Who do I call if the power is out?
Your local utility is responsible for delivering electricity to your business. In case of a storm-related or other outage, call your local utility just like you do now.

Will my local utility put me “at the back of the line” if I report an outage?
No, this is illegal. More importantly, in practical terms, most outages are not to just one address, but to an entire area or zone of their service grid. These repairs restore everybody’s service regardless of where they buy their electricity from.

How does the billing for my electric service work? How do I pay my bill?
You’ll still get just one bill. Whereas you currently typically receive just one bill to cover the generation, transmission, and delivery of power from one company, you now will receive one bill that shows the cost of all of these elements. In order to keep administration costs as low as possible and deliver power at the lowest cost to all customers, most aggregators require automated monthly payment of your bill, in the same safe and reliable manner as you may currently schedule your bank or credit card to automatically pay other regular bills for your business or home.

Who do I contact for questions about my bill?
For questions regarding your bill for electricity contact your aggregator. For questions regarding the delivery of your service such as outages, meter checks, etc., contact your local utility, which is responsible for delivering power (from whatever source) to your business.

Who is responsible for the safety and reliability of my service?
The delivery system is still the responsibility of your local utility and as such, its safety and reliability. The utility will maintain the lines and repair them if there is an outage or storm. The regulatory body overseeing utilities in
your state will help to ensure that the utility continues to provide a safe, reliable delivery system for your use.

Can I buy power from one specific power generating company?
Since saving money is most people’s primary reason for buying electricity through an aggregator, your energy may come from any number of different electricity generating companies at any given time, depending on price. Other options are usually available to purchase electricity solely from a “green” generator, such as solar and wind farms.

Do I have to make a long-term committment to a different electricity provider?
Avoid making long-term commitments with an aggregator or broker, at least initially. A safer option is to choose an aggregator who offers a no-commitment service so you can be satisfied that you are receiving the expected savings and service. If, for whatever reason, you are unsatisfied, you’ll have the option of returning to your previous electric supplier.

What reasons are there to stay with my current electricity company?
If you are a stockholder receiving dividends from your current provider (although the potential savings may cover much more than your current dividends), or if you are not concerned with the amount of money you spend for electricity.

How do I find a reliable aggregator to help cut my electricity bills?
Email George@hbsadvantage.com to learn more of how yo can save in the deregulated Market

Visit or webite to learn more www.hutchinsonbusinesssolutions.com

Saving in the Deregulated Market

The Deregulated Electricity Market will SAVE your company money…but only if YOU act.

Just as deregulating the airline industry resulted in more competition and lower airfares, and the deregulation of the telephone industry resulted in slashing service costs, the deregulation of the nation’s electric utilities will result in utility companies competing for your business with better service and lower prices. While it’s not yet truly practical for the average household to utilize this deregulated environment, the “mid-size” to “large” electricity consumers (small to large businesses) are now able to drastically cut their electricity costs through “aggregators” (companies that buy large volumes of electricity at wholesale rates on behalf of their clients).

A Brief History of
Utility Deregulation

Before deregulation, you were ‘held hostage’ by one telephone company monopoly. You had to pay the rates that they decided were ‘fair’ (though they had to receive approval from the government). The phone company owned the wires, switches, even your actual phone which you had to rent from the phone company (you were not allowed to own a phone of your choice and connect it to “their” system.

Then the phone company monopoly was broken up by the U.S. Justice Department and the FTC, and allowed the entry of competition. The competition began with long distance phone calls, and companies like MCI and Sprint set up their own switching systems and wires and leased the use of the old phone company’s lines (this latter part was mandated by government decree to insure competition). Long distance rates started dropping, first by a little, then drastically. Today a long-distance call can cost as little as a penny (sometimes even less), whereas that same phone call 30 years ago would have cost 20 or 30 cents (or more) per minute. The End Result? Consumers of telephone service now have multiple choices for service providers, and the cost of telephone services (especially long distance, but also local service) have dropped dramatically, saving consumers tens of millions of dollars.

THE SAME SITUATION IS OCCURING TODAY WITH
ANOTHER UTILITY: THE ELECTRIC COMPANY.

In the interest of providing the public with the lowest possible rates and a selection of service options, the U.S. electric utility industry is now in the process of being deregulated. This allows power plants to compete for your business, and as we all know, competition breeds savings for consumers. It also changes the electrical utility industry into two distinct types of services: The companies that transmit power from the electrical generating station to your home or business (they own the poles, transformers, wires, etc…these are called “the distributors”); and the companies who actually operate power plants (“the generators”) and feed electricity into the distributors’ power grids. Of course, some companies are both generators and distributors. Still, deregulation allows you to choose who actually generates the power you consume, and you are free to choose the company that generates electricity in the most cost-effective manner and therefore can sell it to you at the best price.

In 1978, Congress passed the Public Utility Regulatory Policies Act which laid the groundwork for deregulation and competition by opening wholesale power markets to nonutility producers of electricity. Congress voted to promote greater competition in the bulk power market with the passage of the Energy Policy Act of 1992. The Federal Energy Regulatory Commission (FERC) implemented the intent of the Act in 1996 with Orders 888 and 889, with the stated objective to “remove impediments to competition in wholesale trade and to bring more efficient, lower cost power to the Nation’s electricity customers.” The FERC orders required open and equal access to jurisdictional utilities’ transmission lines for all electricity producers, thus facilitating the States’ restructuring of the electric power industry to allow customers direct access to retail power generation.

As a result of the Federal and State initiatives, the electric power industry is transitioning from highly regulated, local monopolies which provided their customers with a total package of all electric services and moving towards competitive companies that provide the electricity while utilities continue to provide transmission or distribution services. States are moving away from regulations that set rates for electricity and toward oversight of an increasingly deregulated industry in which prices are determined by competitive markets. (source: United States Department of Energy)

So how do you get electricity from “Power Company A” when your existing power company is “Power Company Z”?  Envision this example: Suppose your town is served by “Power Company Z”…this is the company that owns and maintains all the wires in your town, and they also happen to have a power generating station as well. This power company also is connected via larger regional or national power grids to 3 other power generating companies (let’s call them “Generator A, B, and C”). 25% of the power users in your town buy their power from Generator A, 25% from Generator B, 25% from Generator C, and the remaining 25% continue to buy from the distributing company “Power Company Z”. If you are one of the 25% that decides to buy your power from “Generator A”, then your distributor “Power Company Z” is required to buy 25% of their overall power from Generator A, 25% from Generator B, and 25% from Generator C. That means that the actual “juice” delivered to your business at any given moment could actually be a combination of electricity from up to 4 different providers, but the end result is the same…YOU, the CONSUMER, dictates which power company provides your share of the total power distributed and used, and you pay for your energy at Power Company A’s rates.

Of course it’s entirely possible that a power distributor has no actual power generating facility, OR that everybody in their service area chooses to buy their power from a source OTHER than the distributing company. The distributing company can not be expected to maintain the poles, towers, lines, transformers, etc. for nothing. Under the new deregulated industry, you will in effect receive two bills: One to pay for the actual amount of electricity used, and another for the delivery of the energy to your business. In actuality, your monthly power bill is consolidated into one payment, but it’s easy to see how much you are paying for electricity and how much for delivery.

In the end the competition between power generating companies will lower your bill by 15 to 20%, based on the experience of electricity users in states where deregulation has already been in place for several years. In the near future this competition will also allow you to make significant social and environmental choices. You may choose, for example, to obtain your electricity from a generating company that produces electricity at a slightly lower level of savings, but uses a cleaner fuel source than another generating company. You might even choose to take a firm environmental stand of receiving very little in savings but purchasing your electricity only from a very “green” power source, such as a producer who uses hydro, solar or wind turbines to generate electricity.

In the past, you could only buy electricity from your local utility, at the rates they set. Today, you have the freedom to buy from a variety of utilities that compete on price and quality for your business.