Gas It Up

June 30, 2016

The past 3 months

Natural gas prices have been on the rise

After establishing a new floor

With the Nymex dropping under $2.00 a dekatherm

It started an accent

And is now heading towards $3.00

That would be a 50% increase

What caused this sudden rise….

Some say…..

Supply / Demand

Others say greed

With the market choking on gas

And gas prices being low

They started shutting down wells

That can certainly drive prices up

Now throw the weather into the mix

Did we have a spring…

Maybe we will have a hot summer

The market is in flux

Should the long range forecast see a hot summer

Prices will continue to rise

If cooler temperatures prevail

You will start seeing prices back off

Should that be the case…

We will see a window of opportunity

For gas and electric prices will drop and

Become even more competitive

In the energy business

Timing is everything

We’ll keep you posted

Live Update

June 11, 2015

Good Afternoon…..

This is George Hutchinson….

Bringing you a live energy update

From our HBS studios

Located in a remote area of…

New Jersey

This Thursday afternoon

June 11th

The year 2015

Before we get into the current market conditions

Let’s take a minute to look

At some of the factors

That has led up to this point

It has been a crazy couple of months

Many people say…..

The energy market

Has developed a mind of it’s own

After starting out with a mild winter

We got hit with colder than normal temperatures

During the months of

February and March

This helped to push energy prices up

The gas nymex

Came close to hitting $3.00

It also had an adverse effect on Basis pricing

January 2016 basis

Was running over $7.00 a dekatherm

As cooler than expected spring temperatures hit

In April and May

We started seeing prices

Drop

Making the market

More attractive

You could hear the chatter starting ……

Maybe the summer was not going to be

That hot after all

Prices continued to drop

The door was opening

Was the bottom going to fall out

Record storage levels

Were being recorded

Then….

Sometime during

The end of last week…..

The weather gods

Started talking about

Temperatures going into the

High 80s…..

Possibly the low 90s this week

Immediately

The market corrected itself

Ohhhhh

Maybe it is going to get hot after all

Prices started to rise

Nymex jumps 10 points

Next day

Nymex jumps another 10 points

The market is up again

As I bring you this update

As I often say….

Timing is everything

But the old adage

Still rings true…..

What a difference a day makes

Stay tuned for further updates

Scratching My Head

April 3, 2014

What goes up!!!

 

 

Must go somewhere…

 

 

 

For it surely isn’t…

 

 

Coming down

 

 

 

It seems the natural gas market

 

Has taken on

 

A life of its’ own

 

 

You have probably

 

Seen me write about…

 

The plight of the nymex

 

 

 

The nymex is where gas is traded

 

 

It represents

 

Gas out of the ground

 

 

 

In mid-December

 

 

The nymex was trading

 

 

In the mid $3 range

 

Per Dekatherm

 

 

 

(A dekatherm is 10 therms….

 

 

We buy gas in bulk!!!)

 

 

 

When the cold weather

 

Bolted upon us

 

 

 

The nymex shot up

 

Into the $5 to $6 range

 

 

 

This is something

 

We regularly discuss with our clients

 

 

It is during the winter months

 

From November thru March

 

 

People use the most gas

 

 

 

And because of the increased demand

 

 

The market can be volatile

 

 

 

It is important to price protect yourself

 

During this time period

 

 

 

The nymex

 

 

Has slowly been making

 

Its’ way back down

 

 

 

As of this writing

 

The nymex is trading

 

 

At $4.45 a dekatherm

 

 

 

 

Still higher than December

 

 

 

 

Will it go back under $4?

 

 

 

 

That remains to be seen

 

 

 

 

Market trends are…

 

 

 

An ongoing conversation

 

In this business

 

 

 

Similar to breathing

 

 

 

 

The second equation

 

That makes up

 

Natural gas prices

 

 

 

Is the Basis

 

 

(Transportation Cost)

 

 

 

How do you get the…

 

 

Gas out of the ground

 

 

To the local provider

 

ie: PSEG, SJ Gas Peco etc.

 

 

 

 

This is where things

 

Get tricky

 

 

 

Over the past 10 years

 

The basis price

 

Ran around….

 

 

$2 – $3 a dekatherm

 

 

 

 

Over the last year

 

 

 

Basis prices dropped

 

To an all-time low

 

 

 

In the past…

 

Gas was coming from

 

The Gulf of Mexico..

 

 

 

Now with new technology…

 

 

 

They are pulling gas

 

From Pennsylvania and New York

 

 

 

 

As a result

 

 

 

We have seen

 

Basis prices

 

 

 

Drop

 

 

 

That was until the cold weather hit

 

In January

 

 

 

Over a 2 day period

 

 

Basis went from….

 

 

Below $2 a dekatherm

 

 

 

To $11 a dekatrherm

 

 

 

And then leaped to over

 

 

$20 a dekatherm

 

 

The next day

 

 

 

We were in unchartered waters

 

 

 

Basis has slowly been making

 

Its way back down

 

 

 

But it hasn’t recovered

 

As quickly as

 

The nymex

 

 

 

The Basis market is

 

Still spooked by the

 

 

Polar Vortex

 

 

 

 

Currently the Basis price is trading

 

 

 

In the $7 range

 

 

 

That is still

 

Way too high

 

 

 

Maybe the basis pricer uppers

 

 

 

Do not realize that…

 

 

 

Winter is over

 

 

 

 

Don’t any of their kids playing….

 

 

Baseball

 

 

 

 

Spring is here

 

 

 

 

The snow is gone

 

 

 

 

Let’s get back to

 

 

 

Market reality!!!!

 

 

 

Or

 

 

 

Could this be the…

 

 

 

New reality

 

 

 

 

 

Stay tuned

 

 

 

We’ll keep you posted

 

To learn more email george@hbsadvantage.com

 

                                         Smart Solutions for Smart Business

As reported in NJ Spotlight
 
Tom Johnson | February 19, 2014

Customers not locked into fixed-rate contracts see bills rise, despite promises of cheaper power

Systrum

When Mark Gottlieb signed up to buy electricity from a supplier other than his utility, his promised savings on bills ranged from 5 percent to 15 percent. Instead, bills rose 34 percent over the past 12 months, including a whopping 214 percent increase in his most recent bill, he said.

That last monthly bill came in at $460.95, about $146.86 more than he would have paid if the Little Ferry resident had stayed with Public Service Electric & Gas, rather than switching to Systrum Energy, a relatively new supplier based in Fairview in Bergen County, according to Gottlieb.

“When you make a claim, you have to make good,’’ said Gottlieb, who says he knows something about the issue as a marketing professional.

He and thousands of other customers fell victim to a spike in winter prices, an event that strained the reliability of the regional power grid at a time when typically it is not under stress. It also resulted in steeply higher bills for customers who had switched to energy suppliers but failed to lock in a price for the electricity to power their homes and businesses.

For some energy suppliers, the extreme weather turned out to be equally unfortunate — especially for those who needed to go out in the market and buy the power to supply their customers. Systrum is a case in point.

“When this polar vortex (the weather event blamed for the brutally cold weather) came in, it just killed everything,’’ said Alex Tullo, one of the owners of Systrum, which has been offering customers the option to switch electricity suppliers for nearly four years.

In a span of about eight days in late January, prices rose by up to 10 times to 20 times than in a normal day, Tullo said. “Something like this happened up the chain, it had nothing to do with us,’’ he said.

Tullo pinned part of the blame on energy speculators who took advantage of the weather to drive prices even higher. “This is not something we did.’’

In any event, the supplier passed on those increased costs to its 5,000 customers, the bulk of which have now returned to their incumbent utility, according to Tullo.

Even with the big spike some customers, such as Robert Rashkes of West Orange, said they have seen savings in their electric bills over the past 11 months although that might be eroded when their next bill comes in.

Still, Rashkes, a retiree living on a fixed income, said his last monthly bill jumped $62 over what he would have paid if he had stayed with PSE&G. “Hopefully, they will be able to give me some adjustment,’’ he said.

In the wake of the cold wave, the operators of the regional power grid lifted a cap on what power suppliers could charge for the electricity they produce as a means of ensuring enough plants would run to keep the lights on. It came on the heels of a surge in natural gas prices, in part caused by an inability of some power generators to get the fuel to run their plants.

The problems that some of the so-called third-party suppliers are experiencing underscore the difficulties the state has encountered in creating more competition to lower high energy bills since it decided to break up electric and gas monopolies in 1999. For many, that goal has not been realized, particularly in the residential sector.

Fortunately for most residential customers, the price spikes will not boost their bills. Roughly 85 percent of them are locked into long-term fixed prices offered by the state’s four electric utilities as a means of stabilizing costs for their customers. Bigger commercial customers may have more problems if they are not locked into fixed-price contracts.

Systrum apparently is not the only so-called third-party energy supplier experiencing problems, according to state officials.

“We have seen an increased amount of calls (from customers) of Systrum and other TPS (third-party suppliers) who chose variable-rate contracts, which are subject to market conditions,’’ said Earl Pierce, a spokesman for the New Jersey Board of Public Utilities. The agency gives licenses to those suppliers, but does not have regulatory authority over the prices they charge their customers.

The huge spikes renewed concerns among consumer advocates who pressed for more oversight of New Jersey’s deregulated energy market. Ev Liebman, associate state director for New Jersey AARP, noted it is one of the reasons her organization backed a recent bill (A-3422) signed into law by Gov. Chris Christie to prohibit alternative energy suppliers from making false and misleading claims and making them responsible if consumers lose money as a result.

“Some of these companies may go out of business,’’ Liebman said. “We don’t want consumers holding the bag.  To see some bills triple overnight is bad.’’

Director of the Division of Rate Counsel Stefanie Brand argued recent decisions by PJM Interconnection, the nation’s largest regional power grid, and the Federal Energy Regulatory Commission to lift caps during these winter emergencies is a cause for concern.

“I think this is going to have an impact on prices overall,’’ she said.

The Retail Energy Supply Association, the trade organization representing third-party suppliers, cautioned the recent spike in energy prices is having an impact, particularly on customers without fixed-price contracts. Systrum is not a member of the organization, according to Bryan Lee, a spokesman for the organization.

“RESA urges customers to review and understand if their energy contract is significantly based on variable pricing, as this may leave them exposed to high prices during unusual periods such as we have witnessed this winter,’’ according to Jay Kooper, New Jersey chairman of the organization in an email delivered to NJ Spotlight.

The unexpected turn of events left some wondering whether some energy suppliers can survive, given their liabilities.

Asked about it, Tullo, whose business is family owned, replied, “We’ll see — one day at a time.’’

Sticker Shock

March 7, 2013

Just when everything

Seems to be going along

Quite well

There always seems to be something

That snaps at you…

That brings you back to reality

In this case

I am speaking

About electric supply prices

Over the past year

Electric prices have been at…

Their lowest level

In the past 4 to 5 years

There were times I would have to

Double check with our providers

To verify the prices were correct

That is how low they were

Then came January 2013….

PSEG is doing an upgrade of their

Network Integration Transmission System

To the grid

This has proved to be very costly

And the Federal Energy Regulation Commission

Has agreed to allow this cost

To be a pass thru cost

To anyone buying electric in PSEG territory

It is known as the NITS

And

This has added anywhere from

3 to 5 mils onto the supply cost

3 mils ( 3/10ths of a penny) or

5 mils ( a ½ a penny)

Doesn’t sound like much

But multiply it by your annual Kwh

Add it adds up very quickly

On top of this…

As the demand for electricity increases

The companies generating the electricity

Are asked to generate enough electricity

To ensure there is enough electricity

In reserve…

To maintain

Reliability on the power grid

The generating companies said

No problem

But it is going to cost you more

As a result…

To maintain the capacity needed

For reliability

The capacity payments jumped 65%

From the prior year

This cost also

Has been tacked onto

The electric supply cost

We have seen this add an additional

5 mils….

Even up to a penny

To the supply cost

These additional costs

Effects all commercial and industrial users

Whether they buy electric from the local providers

PSEG or AC Electric

Or

They are buying electric from a

3rd Party deregulated provider

The deregulated electric market

Is still offering a better opportunity

For savings

Over the Local provider supply cost

But there is sticker shock

We find the clients saying….

Yeah……

But our cost has been……

For the last year or two

I guess it was too good to be true

Don’t let the events described scare you

We keep using more electricity

Thus the demand for electricity increases

There are still real opportunities

For savings

It is just that the bar has risen for everyone

We are finding the best savings opportunities

In the longer term electric renewals

This softens the 65% capacity increase

For capacity cost return

To their prior level of cost

As of Jun 2014

To learn more….

Feel free to contact us

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

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.

Tonight’s the Night

November 21, 2011

Tonight’s the night…..

 

Hurricane Swartz makes his long range winter forecast…

 

 

 

You know the guy with the bowtie?

 

 

How cold is it going to be?

 

How much snow will we get?

 

 

Remember last year?

 

We had that big snowstorm right around Thanksgiving…

 

 

What’s going on with this weather?

 

Here it is mid-November…..

 

Janet and I just got our winter clothes out

 

 

 

Dealing in the energy market

 

The one constant we discuss is temperature

 

 

Back in September

 

We were getting reports saying

 

 

 

The long range forecast calls for an exceptionally cold November

 

 

When will that start……

 

 

November 30th

 

 

 

Those statements kept pushing natural gas prices up

 

 

We held firm….

 

 

We waited….

 

 

We’ll see….

 

 

Here it is mid-November and temperatures are still in the 60s

 

Natural gas prices keep dropping

 

 

A whole market opportunity has opened up

 

 

With prices so low

 

We start to measure risk

 

 

How much lower can prices go?

 

 

 

Don’t you love this kind of stuff?

 

 

 

 

Can natural gas prices go lower?

 

 

Yes!!!

 

But there is more upside risk

 

 

 

With prices being sooooo low,

 

 

 

One cold snap and …

 

 

The market price can jump up fast…

 

 

 

It’s called the whiplash effect

 

 

 

Prices always go up faster…

 

 

And then they take their good old time coming back down

 

 

 

Now here’s my shameless HBS plug

 

 

For those businesses still buying natural gas from their local provider

 

This is a great time to lock into a very competitive fixed price contract

 

 

 

There we go….

 

I said it

 

 

Now the disclaimer…

 

 

Some circumstances may not allow you to qualify

 

            Your monthly usage may be too small

 

                                          or

           

            We find stop service notices on your bill

 

 

 

 

 

Pick it up Hutch

 

 

Let’s get back on topic

 

 

Ohhhhh…..OK

 

 

 

So……..

 

Hurricane….

 

 

What will you say?

 

 

How cold will it be?

 

 

How much snow will we get?

 

 

 

I just bought a new snow shovel last year

 

 

I’ll be ready

 

 

 

PS: This was written on Wednesday. If you want to know what Hurricane said, you will have to go online and Google it.

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

The Dilemma

September 23, 2011

Natural Gas prices continue to be very competitive.

 

However…

 

This has presented a dilemma.

 

 

 

When you request pricing for an existing client,

 

Who has been participating in the deregulated market…

 

 

And

 

 

You compare the proposed price

 

vs

 

What the client has paid over the past 12 months.

 

 

Guess what???

 

 

 

The price normally is higher than what they have paid.

 

 

 

The client’s response normally is:

 

 

Why is it more?

 

 

Why can’t I play less?

 

 

 

That’s a good question,

 

 

 

Now what answer do you
want?

 

 

 

 

Let’s just stick to
the facts

 

 

 

The truth is that the natural gas market is a moving target

 

It is a commodity that is being traded 24/7

 

 

 

 

Several years ago (2008),

 

Natural gas prices shot up

 

 

Market prices were $12 – $14 a decatherm

 

Which translates into $1.20 – $1.40 a therm

 

 

That was the commodity cost to the providers

 

 

 

So consumers were even paying a higher rate

 

 

 

Since that time, prices have steadily dropped

 

 

 

You have probably seen me reference

 

That many analyst saw natural gas pricing

 

Reach a floor in

 

Late October / November 2010.

 

 

Problem is….

 

That nobody knows where the floor is…

 

 

Until you pass it

 

 

 

Well guess what??

 

 

Prices may once again be creating a floor as we speak.

 

 

The Nymex continues to drop

 

It has gone full circle over the last year

 

 

What do you mean the
last year?

 

 

It has gone full circle over the past 2 months

 

 

 

I have a friend, who
is a chiropractor,

 

He asked me what is
wrong with my neck.

 

 

I told him I have been
watching the Nymex!!!

 

 

 

The problem becomes….

 

 

There is more upside risk

 

Then there is downside risk.

 

 

Translated……

 

How much lower can prices go?

 

 

All future indications show prices going up

 

 

 

What are your options:

 

 

 

Float the market while prices continue to remain low

 

 

If you see prices starting to go up

 

You can always turn around and lock your position

 

 

There are various other options…

 

Winter locks…Lock in the price for months with the highest
usage

 

 

Basis locks….Lock in the transportation cost and float the
nymex

 

 

Anyone of these options can be used

 

To be proactive against future price spikes

 

 

 

 

Another issue:

 

 

 

We spoke in the past that natural gas prices

 

Are made up of 2 components

 

Nymex… The cost of natural gas out of the ground in Gulf of
Mexico

Basis…… The cost of transporting the gas from LA to your
local provider

 

Index…….The sum of the 2 or the base cost of the commodity
to the provider

 

 

While the Nymex prices are creating new floor space

 

The basis cost is higher than it should be

 

The result….

 

Adding a low Nymex cost

 

To a higher than normal basis cost

 

Gives you a higher overall cost

 

Then what you were paying over the last year

 

 

 

I find this all very
interesting…

 

(You have to say that
while you are rubbing your chin)

 

 

What should you do?

 

 

HBS presents all the options

 

 

We look at where the market has been

 

 

What are the future projections showing?

 

 

We look to educate our clients

 

So they have a full understanding of how the market works

 

 

We want our clients to feel comfortable

 

 

 

Knowing that they made the best decision

 

For their company

 

When all the facts were presented

 

 

 

To learn more about
deregulated energy opportunities for your business email george@hbsadvantage.com

 

Visit us on the web www.hutchinsonbusinesssolutions.com