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.

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.

The deregulated natural gas market is presenting great opportunities for savings for those commercial accounts that are spending a minimum of $3000 per month.

With the recent drop in natural gas prices over the last year, Hutchinson Business Solutions (HBS) is providing savings from 8% to 20% depending on who your local provider is.

Your local provider currently buys natural gas wholesale and then bills their clients retail pricing. HBS puts our clients in a wholesale position.

When looking at historical pricing over the last year, we show that if you are currently a South Jersey Gas customer, your saving would be about 8%. PSEG and NJ Natural Gas customers would find a 15% savings, while Elizabethtown natural gas clients would be saving 20%.

We are currently advising clients interested in participating in the deregulated natural gas savings to float the market. This will continue to benefit them as long as the market stays flat or continues to go down.

If we were to look at fixing a term contract of 12 to 24 months, we often find that the fixed or locked price is actually higher than the 12 month average you have currently been paying. There are clients that do choose to lock a price, for they do not want to deal with market fluctuations and they are interested in adding certainty to their cost. The only problem that may arise is that if the market remains flat or goes down, they are unable to get out of their contract. Should market prices go up, they will not be affected for the price will remain the same.

Should a client choose to float the market, they will take advantage of the lower market prices and if we see the market start to spike up, they will always have the option to lock a price anytime during the term of the contract.

It has always been our goal to make the client aware of all the options available to them and to ultimately making them comfortable with the decision they choose.

Would you like to know more about opportunities to save in the deregulated natural gas market? Email george@hbsadvantage.com or call 856-857-1230.

We have found that savings is the deregulated natural gas and electric market provide great opportunities to add savings to your company, reducing cost and increasing your bottom line.