Who Hit the Switch?
December 9, 2010
We have been lucky over the pas t few years. We have been blessed with warmer than usual winter temperatures. I know; last year we had some major snowstorms but overall the winter temperatures have been warmer.
Over the last year we have seen the natural gas market prices react to these warmer temperatures. Storage numbers have been at a 5-year high and prices have continued to drop to their lowest sustaining level in the last 3 to 4 years.
Speaking with many energy analysts, they feel we may have hit the bottom and prices will slowly start inching up.
Inching up may be an understatement? Just in the last week, prices jumped over 10%. Hit with the sudden cold front the market took off.
The cost of buying natural gas on the open market is made up of 2 factors. Nymex (gas out of the ground to the banks of Louisiana) and Basis (the transportation cost for getting natural gas delivered to your local provider). These 2 factors combined give us the Index. This is the total wholesale cost to buy natural gas on the open market.
The last couple of weeks have seen the market in a holding pattern. Nymex prices were under $4.00 a decatherm ($.40 cents a therm) and it was a wait and see scenario. Should we have seen continued mild temperatures the market would have remained stable.
With the sudden switch to cold temperatures and forecast for a continued cold snap; the market did not inch up but leapt. Nymex prices open today, as of this writing, at $4.61 a decatherm. Measure this against the low opening on 10/25/10 of $3.29 a decatherm.
Prices are still low compared to where they were 2 to 3 years ago. In 2008, natural gas prices hit a high of $14 to $16 a decatherm ($1.40 to $1.60 a therm). Just last year (2009) we were looking at the average price to compare of around $10.00 a decathem ($1.00 a therm). We are now seeing fixed price positions in the low to mid $6.00 a decatherm range.
Each account is unique and priced individually, for pricing is based on demand factors. Many clients are seasonal clients and their biggest usage comes from heating their locations during the winter. Their natural gas prices would be higher than a client having a more even demand factor, for they use natural gas throughout the year (a restaurant would be a good example).
Some clients have benefited by floating the market, taking advantage of the falling prices over the last couple of years. Now may be the time to begin a discussion and review your options. There is more upside risk (chance of prices raising higher) than there is downside risk (market prices have been at a 4 year low).
You can lock the price going forward for a 1 or 2-year period, which will provide an overall savings from the average prices you have been paying over the last year or at the minimum, lock the winter month which will provide price certainty.
Should you feel this is only a temporary rise in market prices, you may choose to float the market and look for a continued flatness in pricing.
One other option to consider, should the float scenario be of interest, would be to lock the basis (transportation cost) and continue to float the nymex. Several of our clients have found success with this option in the past. This position is normally taken when they see the Nymex as being too high and feel the market will be dropping over time. In the past, if we saw basis price fall under $2.00 this was considered to be a good deal. The current basis prices are well under $2.00.
Should you like to know more about your deregulated gas options email george@hbsadvantage.com or call 856-857-1230
Visit us on the web www.hutchinsonbusinesssolutions.com
Finally
November 23, 2010
It’s been a long wait.
It has been well publicized, that in January 2011, PECO will lift the rate caps on electric prices and will be entering the deregulated market.
Just what does this mean for PECO customers?
As part of deregulation, local providers will no longer own their own power plants to generate electric. Their job is to deliver electricity to the end user, the client.
They are able to sell the supply, which they buy through an auction process, to anyone who chooses to stay with the local provider at a default price, which could be higher.
PECO is actually encouraging larger users to shop their rates with 3rd party providers.
If your business is currently spending a minimum of $5000 a month on electricity, Hutchinson Business Solutions will now be able to help you buy your electric supply from a 3rd party supplier.
The new rates PECO will be proposing as of Jan 2011 will be tiered for certain rate classes. For certain customers the first tier is for the first 80 hours of usage per month, and is the highest rate. This can range from $0.16 cent per kwh to $0.17 cents per kwh.
The prices will be scaled down as your usages progress. The more electric you use, the more the price goes down.
PECO is only publishing these rates for 90 days. That means that as of April 1st, new prices will appear based on such potential factors as:
– How PECO needs to true-up their costs
– Current market values at that time.
Another factor being added into the PECO price to compare is RMR (Reliability Must Run). This is a pass thru cost from the local provider for system reliability.
This means having the ability to generate electric when it is needed. Although this cost has not been defined, it could be in the $0.001 mil to $0.003 mil ranges (3 mil ie:3 tenths of a penny).
The bottom line, should you choose to stay with PECO, you could be paying higher default rates as of Jan 2011.
Each account is unique, based on their demand and usage patterns. For smaller to midsize accounts; we could see electric supply prices in the $.010 cents per kwh to $.13 cent range as a default price from PECO.
We have been working with clients in the PECO territory this year and have found significant opportunities in the deregulated electric market.
HBS clients are finding savings ranging from 10% to 20% by purchasing electric thru deregulated 3rd party providers.
Hutchinson Business Solutions (HBS) has been providing independent, deregulated energy solutions for over 10 years.
There is no upfront fee.
Our strategic partnerships allow us to represent all the major providers currently selling energy in deregulated states.
Should you like to know more about this topic, email george@hbsadvantage.com
or call 856-857-1230
Visit s on the web www.hutchinsonbusinesssolutions.com
Where’s The Bottom
November 12, 2010
Natural gas prices continue being very competitive.
How low will they go?
Hurricane season does not officially end until November 30th, however it is rare to see a tropical storm in the Gulf this late in the season. The 2010 Atlantic Hurricane season was very active this year, with 19 named storms. The last time I looked we were up to T for Toma.
Here we are heading into the end of November and natural gas nymex prices are still under $4.00.
Where is the bottom?
Without a crystal ball, this ends up being a very difficult question to answer.
When you look at the overall picture not much has changed, Storage levels are still at a 5-year high and holding. It has been like that for several years now.
We do have the Marcellus gas in Western PA. Some geologists estimate that it could yield enough gas to supply the entire East Coast for 50 years.
That must prove to be the major factor. It is the old supply demand scenario?
The bottom line states, that if your business is currently spending a minimum of $3000 a month and you are still with the local provider, you should be looking at buying natural gas from a 3rd party provider in the deregulated market.
Did you know that if you are a PSEG customer, you ended up paying 15% higher for natural gas over the last year?
How much savings would that have equated for your company?
With natural gas prices being so low we have also seen this translate into very competitive deregulated electric prices. We recently signed a client the other day and they will be saving 30% on their electric supply cost for the next 2 years.
I know that savings is a parity of how much you spend but let me ask again.
How much savings would that have equated for your company?
If you are currently spending over $3000 a month on electric and your company is still with the local provider, you should be looking at buying electric from a 3rd party provider in the deregulated market.
To find out more about this opportunity email george@hbsadvantage.com or feel free to call 856-857-1230.
Deflated
October 25, 2010
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 3rd 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’ 4th 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 3rd 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
October 5, 2010
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.
Dereguation…Time to Get Onboard
August 23, 2010
The deregulated utility market has presented a great opportunity for savings over the last year. For the first time in 3 to 4 years, market prices have been less than the providers’ prices, aiding in a windfall to those looking to save money on utilities.
If you have been tracking natural gas prices, you would see that the market has dropped close to 20% since the end of June 2010.
Natural Gas
With the steady fall of natural gas prices, HBS has been advising clients to float the market index position to take advantage of the current market prices. If you are a PSEG customer and chose to float the wholesale market over the past 12 months, you would have realized a 17% savings. Not bad!!! South Jersey Gas clients would have saved 8%.
When speaking to our clients, we still offer an option to fix the price for a 12-month period, however it doesn’t make too much sense to fix a price that is actually higher than the price to compare that the clients have been paying over the last 12 months. Why is the price higher? Because the future market still shows that prices will go up.
Some clients may choose to fix the price for they want certainty in their cost. They do not want to be effected by market fluctuations. However if you lock the price, you are unable to change the price should the market continue to go down. By floating the market index, you can take advantage of the lower price and should the market turn and start to shoot up, you will have the option to lock in a price at a later option.
Electric
The electric market is directly affected by the natural gas market prices for 30% of electricity is generated by natural gas. So natural gas is commonly used as a market indicator. With the current fall of natural gas prices, electric prices continue to fall and have become even more competitive.
The electric market is completely different than the natural gas market. While natural gas prices change monthly with the local provider based on market conditions, the electric prices are fixed from June till May.
Every February, the state holds an auction for those selling electricity in New Jersey. The local providers buy electricity on the open market and blend the results with the electric it has purchased over the last 2 years. So the current market prices that the local providers charge are based on a blended price from purchasing electric over the last 3 years. They take these results and then present a proposal to the BPU (Board of Public Utilities), as to the summer rates (June till Sept) and winter rates (Oct to May) they wish to charge. Both the summer rates and winter rates have defined on-peak and off peak pricing.
As a result each account is charged differently based on their usage. A company with more off peak usage will actually be paying less than a company whose prime usage is during the daytime when on-peak charges are used.
Fixing your electric cost in the deregulated market offers a flat rate pricing no matter when you use it. This has offered a great savings opportunity due to the current market downturn. HBS clients are realizing saving from 10% to 20% on current flat rate pricing.
Should you like to know more about saving in the deregulated utility market, email george@hbsadvantage.com or call 856-857-1230.
It Makes Sense! Why Overpay?
July 1, 2010
Would you intentionally overpay for your phone service… monthly rent… or maybe a new car?
Of course not…
Then why would you overpay for your natural gas or electric bills?
Lower Rates… For the first time in the last 4 years deregulated natural gas and electric prices are lower than the local provider charges.
You now have a choice and can choose lower energy rates without any risk or local service change. No-Hassle!
Your local providers buy natural gas and electric on the open market at wholesale prices and then bill their customers at retail prices.
We put our clints in a wholesale position.
If you are a business spending a minimum of $3000 a month a piece on your electric or natural gas, you may qualify for deregulated savings.
We conduct a no-hassle evaluation. There is no-risk and there is no-cost. We simply find you the best rates available.
All we need is a copy of your latest provider invoice.
Start Saving and join thousands of happy customers who have already lowered their energy bills!
Makes Sense!
Why Overpay?
To learn more email george@hbsadvantage.com or call 856-857-1230
PECO Completes Third of Four Electricity Purchases
June 24, 2010
Excerps from
PHILADELPHIA–(BUSINESS WIRE)–In preparation for the final transition to a competitive electric market in Pennsylvania, PECO recently completed the third of four planned electricity purchases to serve customers who have not chosen a competitive electric generation supplier beginning Jan. 1, 2011.
Beginning January 1, 2011, the prices PECO and our customers pay for electricity will be based on electric market pricing, after having been capped for more than 10 years. At the same time costs to operate our electric systems also have been increasing. The effect of all of these changes on PECO electric customers will be price increases of about 10 percent. For the typical residential electric customer, the increase is about $8 more per month.
The May 2010 purchases resulted in an energy price of 7.95 cents per kilowatt hour (kWh) for PECO’s residential customers. When combined with 2009 purchases, the May purchases result in a price of 8.91 cents per kWh for PECO’s residential customers, 8.66 cents per kWh for small commercial customers, and 8.63 cents per kWh for medium sized commercial customers.
Because energy prices fluctuate, PECO is buying the electricity needed to serve customers in 2011 at four different times – reducing the risk to customers of purchasing electricity all at one time when market prices could be high. PECO will complete the remaining purchases in September 2010. The results of all four purchases will determine the exact price PECO’s customers will pay for electricity beginning Jan. 1, 2011.
“We continue to be able to purchase electricity at lower wholesale market prices, helping reduce the prices for our customers,” said Denis O’Brien, PECO president and CEO. “And we have programs available to help customers use less energy and save money.”
Our Perspective:
Now we’re getting there. As Peco begins to release information, we will be better able to determine what opportunities for savings exist in the deregulated market.
All we will need is a copy of your latest invoice and a letter of authorization, which allows us to request annual usages on your account from Peco.
HBS is an independent energy management company. We have been providing deregulated savings to our clients for over 10 years. We represent all the major providers looking to sell electric in the Peco territory.
We will define the right provider at the the right price.
To learn more email george@hbsadvantage.com or call 856-857-1230
Peco Deregulation Is Here
June 21, 2010
As you may know, with the enactment of the Electricity Generation Customer Choice and Competition Act in Pennsylvania, customers have the ability to choose who supplies their electricity. With rate caps expiring January 1, 2011, customers in the PECO utility territory should be reviewing their supply options.
PECO will be holding an auction on May 25, 2010 to obtain electric power for the largest commercial and industrial customers – those in the above 500kW customer class. Earlier this year, those customers were sent a letter from PECO requesting that they indicate whether they were interested in having their electrical needs included in the PECO auction. Customers that sent back a response by March 1, 2010 and indicated that they were interested in reviewing the one year fixed price offer from PECO for calendar year 2011, will be allowed to select the fixed price that is the result of that auction process.
Once the Pennsylvania Public Utility Commission (PAPUC) enters a decision that approves the results of the auction, PECO will announce the applicable fixed price rate for 2011, and customers will then have a 30 day window to indicate if they will accept the fixed price offer.
Once PECO announces the fixed price rate on May 25, 2010, you have the ability to compare the rate from PECO to pricing and options from other suppliers. With electric commodity prices at 5 year market lows, and electric generation suppliers (EGS) competing for your business, it could be advantageous to consider your options.
With the transition to a competitive market and the expiration of rate caps, all customers in the PECO service territory are able to have a meaningful choice in their electric supplier and can select service from a licensed EGS.
If your business or organization chooses to receive electric supply from an EGS, you can select a product or term of service now that meets your electric needs in 2011. This allows you the flexibility of reviewing your options in advance and an opportunity to choose from product options that work best for you and your business.
Products offered by EGS differ from that which is available from PECO, such as renewable energy, demand response, and electricity product offerings, and can be individually tailored for you and your business.
Our Perspective:
We have found that the deregulated market can offer savings from 10% upto 25% depending on your usage patterns. We are still awaiting Peco to release their price to compare figures. This will serve as a basis to make your decision. Hutchinson Business Solutions (HBS) is an independent energy management consultant. We represent all the major providers offering opportunities for savings in the Peco deregulated market.
To begin, all we will need is a copy of yor latest Peco energy invoice along with a signed letter of authorization, which will allow us to request your annual usages over the past 12 months.
To find out more about your options in the PECO utility territory email george@hbsadvantage.com or call 856-857-1230.