Met-Ed New Price to Compare For Three Month Period

Met-Ed Price to Compare, Effective December 1, 2012

General Secondary – Non Demand Metered (GS-Small) 9.133 cents per kWh

General Secondary – Volunteer Fire Company 8.900 cents per kWh

General Secondary – Volunteer Fire Company Time of Day 8.900 cents per kWh

General Secondary – Demand Metered (GS-Medium) 9.133 cents per kWh

Municipal Service (MS) 9.133 cents per kWh

Remember: Three month pricing exposes you to more price risk than a fixed price contract.  If you want to control your energy cost, paying a small insurance premium to eliminate upward price movement may be an attractive option for you.

Penn Power New Price to Compare

For the three month period beginning December 1, 2012:

General Secondary – Small (GS) 4.529 cents per kWh

General Secondary – Volunteer Fire Company 5.881 cents per kWh

General Secondary – Volunteer Fire Company Time of Day Option 6.922 cents per kWh,

On-Peak 5.308 cents per kWh, Off-Peak 5.793 Average ¢/kWh, based on 30% On/70% Off split

General Secondary – Medium (GSM) 4.529 cents per kWh

Remember: Three month pricing exposes you to more price risk than a fixed price contract. If you want to control your energy cost, paying a small insurancepremium to eliminate upward price movement may be an attractive option for you.

PPL Default Service Rates Will Fall on December 1, 2012

The Price to Compare for small commercial customers of PPL will fall on December 1.  The Price to Compare will be 10.206¢, a reduction from the previous price of 10.346¢.  These prices are only for the three month period December 2012 to February 2013.

Duquesne Light Files New Default Service Rate

Duquesne Light has filed with the Pennsylvania PUC updated generation rates for medium (25-300 kW metered demand) commercial and industrial (C&I) customers for the period of December 1, 2012 through May 31, 2013.

The new supply charge for medium C&I customers (Rates GS/GM and GMH, 25-300 kW) is 4.2486¢/kWh. This charge reflects base supply only, and not other components included in the Price to Compare.

Connecticut Light & Power Announces New Standard Service and Last Resort Rates

Connecticut Light & Power (CL&P) announced new electricity supply pricing for the six month period Jan 1, 2013 to June 30, 2013. Note that when comparing these prices to fixed price contract supply prices, you will find that longer term contracts will have a slightly higher price, which accounts for the fact that prices are forecast to rise after June 30.

CL&P Standard Service Rates, January 2013 – June 2013 (¢/kWh)

Rate 1: 7.615
Rate 5: 7.615
Rate 7: On-Peak 10.236 and Off-Peak 6.736
Rate 18: 7.808
Rate 27: On-Peak 9.858 and Off-Peak 6.858
Rate 29: 7.808
Rate 30: 7.808
Rate 35: 7.808
Rate 37: On-Peak 9.858 and Off-Peak 6.858
Rate 40: 7.808
Rate 41: (less than 500 kW) On-Peak 9.790 and Off-Peak 6.790
Rate 55: (less than 500 kW) On-Peak 9.790 and Off-Peak 6.790

Rate 56: (less than 500 kW) On-Peak 9.790 and Off-Peak 6.790

Rate 115 7.808
Rate 116 7.155
Rate 117 7.155
Rate 119 7.647

CL&P Last Resort Service Rates, Jan. 2013 – March 2013
(¢/kWh)

Rates 39, 41, 55, 56, 57, & 58 (at or over 500 kW):
January: 8.707
February: 7.955
March: 6.364

For Last Resort Service rate classes with peak/off peak periods, the Last Resort Service rates are identical for each period.
All rates listed above rates reflect the Generation Service Charge plus the bypassable Federally Mandated Congestion Charge of 0.150 cents per kWh.

National Grid in Massachusetts Increases Basic Service Rates by 40%

National Grid customers in Massachusetts with Fixed Basic Service will see a rate increase on their bills starting on November 1, 2012.

G-1  Fixed customers will see a 9.53% electricity rate increase to $0.07/kWH for the period 11/1/12 to 4/30/13

G-2 SEMA customers will have electricity rates increase by 43% to $0.07231/kWH for the same period.

G-2 NEMA customers will have electricity  rates increase by 41.2% to $0.07478/kWH.

G-2 WCMA customers will have rate increased of 48.8% to $0.07486/kWH.

As a base of comparison, as of this posting on October 12, the one year fixed-price contracts for the above customers, with a November start, would be as follows:

G-2 SEMA: $.072

G-2 NEMA: $0.0722

G-2 WCMA: $0.07199

Electricity Supplier Offers Fixed Rate for Seven Years in Pennsylvania

One of the many electricity suppliers offered by Better Cost Control, quietly introduced the longest-term fixed-rate deal ever offered to  customers since the retail market opened up to full-scale competition in Pennsylvania.  This fixed price offering is available in these electricity supplier areas:

  • MetEd
  • Duquesne
  • PECO
  • Penelec
  • PennPower
  • West Penn Power

Unlike other fixed-rate offers, which tend to demand higher prices for longer terms, this seven-year rate is among the lowest on the market right now. At 7.5 cents per kilowatt hour (kWh), it is 28.6 percent less than Peco’s current price of 10.5 cents per kWh.  Rates are different depending on your local electricity distribution company.

You get a good, low price that’s not going to change for seven years.  One reason they are able to offer such a low price is that this supplier actually owns generation assets, versus most suppliers that actually hedge prices with financial instruments such as derivatives.

Your local electricity company continues to provide billing and customer service as the distribution company.

The Pennsylvania Public Utility Commission currently lists many options on papowerswitch.com. The offers include variable rates, fixed rates and green-energy options.

A long term contract will appeal to customers who want to set-it-and-forget-it.  They will never have to worry about a price increase for the entire seven year period.

Fixed-rate deals may be attractive right now to some customers who are about to be shocked with higher bills because of their utility’s quarterly price adjustment. For example. Peco’s supply charge went up 21.5 percent on October 1.  Peco says the rates will come back down to 8.81 cents per kWh on Jan. 1.

FirstEnergy Solutions says it can offer the price certainty because its parent company controls 20,000 megawatts of power-generation capacity and is looking to lock in long-term customers.

Power prices currently are at record lows, so locking in for the long-term is similar to refinancing a mortgage when interest rates hit bottom. There’s always a chance the rates could go lower, but it’s more likely they will go up.

But by making a seven-year commitment, customers may be limiting their future options. Peco is currently installing smart meters that will allow suppliers to offer hourly pricing next year, which some customers may use to reduce their bills by shifting their discretionary electrical loads to off-peak hourly rates.

Nstar Gas in Massachusetts files new natural gas supply rate – lowest since 2002

NStar Gas has submitted its annual gas rate to the Massachusetts Department of Public Utilities, and if approved the rate will be the lowest in a decade and 18 percent lower than last year’s rate.

According to a release from NStar Tuesday, the proposed supply rate will be 57.32 cents per therm, down from about 70 cents. If approved the new price will go into effect Nov. 1.

“As we head into another heating season with low prices, it’s no wonder we’re seeing record numbers of customers converting their heating systems to clean, efficient natural gas,” President of NSTAR Gas Rod Powell said. “In today’s economy, with the price of other fuels hovering near all-time highs, our customers will once again be glad they chose natural gas to keep their families warm this winter.”

According to NStar, the supply rate, known as the Cost of Gas Adjustment, reflects the price NStar pays for natural gas, with no profit made by the company on this charge. The proposed decrease reflects a continued decline in natural gas prices due in part to abundant domestic supplies.

First Energy files for Default Service Price to Compare

First Energy just filed for new Default Service rates in Pennsylvania.  These will be the new Price-to-Compare for all commercial electricity customers to use when comparing competitive electricity price offers.

Assuming PUC approval, rate effective September 1, 2012 to November 30, 2012 will be:

MetEd Commercial: $0.07181 per kwh

Penelec: $0.06541

Penn Power: $0.05550

As of this writing, fixed priced electricity contracts through Better Cost Control will save the customer money for the period that First Energy filed.

You may wonder why the dramatic price difference between Penn Power and the other two companies.  This is due to the months that they contracted their tranches of electricity. Penn Power has only two tranches that were purchased at auctions in  Jan 2012 and March 2012, when prices were at their lowest.  The offer prices are based on a weighted average of the different contract periods:

MetEd: Tranches purchased May, 2011, October 2011, Jan 2012, May 2012

Penelec: Tranches purchased May 2011, Oct 2011, Jan 2012, Mar 2012

Penn Power: Tranches Jan 2012 auction and March 2012 auction

To obtain a quotation for electricity or natural gas, contact Better Cost Control.

Electricity and Gas Energy Market Update

Natural Gas PipelineAfter reaching a recent high in late July, NYMEX gas prices fell for the first two weeks of August as weather moderated.  Prices have stabilized, but remain low overall.  One big customer question is whether there will be a fall dip in prices similar to 2009, 2011 and 2012.  Understand that electricity prices are influenced, in great part, by natural gas prices.

NYMEX Prices as of 8/22/12

Prompt (September):    $2.82 (we are down today due to bearish storage report)

12-Month Strip                 $3.31  (this is used for pricing 12 month contracts)

Cal 13                                    $3.54 (Calendar year 2013

Cal 14                                    $3.94

Cal 15                                    $4.15

Reasons for market movements

NYMEX prompt peaked on 7/31/12 at $3.27.  Calendar Strips also hit highs since February on or near that date.  Anemic storage injections and hot weather were key drivers.Note that through July 31st, this summer was hotter than last and 2012 was the hottest year on record.

    • However, August weather has been much milder and demand has dropped, leading to lower prices.
    • Prompt gas fell swiftly from $3.25 to near $2.75 by August 10th, but has been unable to sustain a move below $2.70 due to technical support and coal-to-gas switching.
    • Natural gas storage inventories remain on pace for a new record by the end of the injection season, but the likelihood of a storage glut has greatly diminished by below normal injections. Weekly injections have averaged 23 Bcf/week less than a year ago thereby reducing the surplus from 888 Bcf to 442 Bcf compared to a year ago.  At this pace, inventories will finish the season well below estimated national capacity of 4,100 Bcf.  (see storage chart for more detail and graphical illustration) .  Remember that based on national capacity of 4,100 Bcf, the surplus must decline to at least 248 Bcf since last year reached 3,852 Bcf
      • Last week’s storage report was larger than expected and prices are testing $2.70 support again.
  • Rig Counts – natural gas rig counts are down 45% versus a year ago and horizontal rig counts (mostly shale) are only up by 1%.  Production is relatively flat over the last few months – this may be due to improving shale technology, a backlog of wells that have been completed but not connected to the pipeline grid and the lag impact of placing rig versus starting production.  And rig counts are not always a reliable metric, but they are a trend indicator and lead to concerns about ongoing supply growth into 2013-14.
  • Coal-to-gas switching peak in the spring when gas prices were below $2.00.  For the first time since tracking began in the 1970’s, gas fired generation matched coal fired generation in the US supply stack.  This was due to economics – not EPA.  We expect ongoing strong switching, although not as much may be needed due to the shrinking storage surplus.  This is a factor that has allowed prices to move into the $2.75 – 3.25 range.  In the long-term (2015), EPA Mercury rules will be large driver of coal plant retirements in addition to low gas prices.
  • Hurricane season – the season is less of a concern as US supply migrates onshore due to shale gas, but there is still some risk.  So far 2012 has been quiet, but we are now in the peak of the season until mid-October.  Overall expectations for this season are not for an active season. Tropical Storm Isaac is currently in the Caribbean and is a threat to Florida and the Eastern Gulf of Mexico.
  • Where will prices go from here?
    • Short-term – there is still potential for a fall dip, but we do not expect new lows ($1.90 in April) due to shrinking storage surplus and reduced chance of a storage glut.  Breaking through $2.70 gas support is a first step and will depend on coal-to-gas switching and short-term weather.
    • Long-term – Prices for 2013 and beyond are likely to move directionally with the prompt month, but any extreme dip will have a muted impact on long-term because weather’s impact is mostly on near-term and there is limited ability to carryover storage surplus from 2012 to 2013 due to limited capacity.  Going into 2013 with a smaller storage surplus, flat or even declining gas production, and increased demand due to coal-to-gas switching all point to higher prices.  So outside of weather, the fundamentals are bullish compared to last year.  Furthermore, winter 11-12 was the warmest on record and is unlikely to be repeated.  This does not mean that prices will skyrocket as shale gas still limits upside, but it does point towards higher prices in 2013 compared to 2012 and the possibility that we’ve seen the bottom.
    • Power – gas relationships remain critical, but heat rates are up nationally over the last year and this relationship has eroded.  However, heat rates are down over the last month and this is worth noting to customers.
    • What else?
      • EPA Regulations:  Just last week the Cross States Air Rule (CSAPR) was vacated.  This is a big win for coal and will, at minimum, delay implementation for a few years.  However, market impacts were modest as gas prices did sustain declines after the announcement and some regional heat rates are down.  ERCOT and PJM are the markets most impacted – stay tuned for more information.  The bigger EPA rule is MATS (Mercury and Air Toxics Standards) and this rule is unaffected and has a much broader impact starting in 2015.  Most coal-to-gas switching in 2012 has been due to gas versus coal economics and this has not changed.  Please reach out to the Market Intelligence or Regulatory Affairs team for more information.
      • Message to Customers:
          • If you are looking for a fall dip, it is possible, but you should not expect new market lows due to changing fundamentals over the summer.  It is also difficult to time this dip (September in 2009, October in 2010, while prices fell into winter in 2011 due to mild weather).
            • So customers must ask:  Will there be a dip?  When will it happen?  And how deep?
          • For long-term, it is still not time to sell fear as prices should remain at levels low based on long-term history (great value), but it may not be a simple as waiting for the last minute and locking in a year-over-year decline.  There is clearly risk that 2013 and 2014 prices will go up from here and even if they do fall, they may not fall as low as 2012.  So be careful setting targets.
          • For customers that expect never-ending price declines, a key point is that we did see market participants react to low prices in 2012.  Producer cuts and increases in gas generation demonstrated that market participant will react to low price in a way that pushes prices higher. So outside of abnormal events such as the record-warm winter, the warm does have a bottom.
          • For index product customers, there is still great value in the index markets and customers should continue to participate.
          • And gas-power correlations remain critical, but not as strong as in the past so be careful basing strategy on gas along.  There are many regional issues that I have not covered in this email.

        Did you find this posting a bit challenging to understand?  If so, this is one more reason you will benefit from an electricity/energy broker such as Better Cost Control.

The truth about reverse auctions for electricity

If you have been doing research about buying electricity, you may have heard about Reverse Auctions.  Reverse Auctions are auctions where suppliers bid against each-other with a lower price. The bidding ends when the electricity price reaches a point where it will not go any lower.  The buyer ends up with the lowest price for their electricity.  This works, in many cases, with very large users.  If your annual kWH usage is less than 10,000,000 kWH/year and you think you are participating in a reverse auction to buy your energy, think about the man behind the curtain in the Wizard of Oz.  You are experiencing smoke and mirrors. You are being conned, plain and simple.

You see, for an electricity supplier to compete in a reverse auction takes resources. Think costly man-power.  Think preparation time.  Small deals just are not worth the time.

So how does the reverse auction work for these customers?   There are three approaches:

1. For customers with less than 1,000,000 kWH/year of electricity usage, the broker with the reverse auction web site has their site populated with the daily matrix prices for the various suppliers that they have broker agreements with.  The reverse auction software then adds a penny or two to these prices.  Then the auction starts!  The customer watches with excitement as the computer (not bidders!) reduces the prices in small increments among the bidding suppliers.  Finally, the price feverishly decreases until it settles and goes no lower.  The customer feels like they saved a bundle.  But guess what?  That price is the matrix price that the customer would have gotten without the auction.  In fact, the price is actually a slight bit higher than if the customer used a broker that didn’t have the overhead of the fancy web based system.  How do we know this?  Because we have been in this business for over ten years.  We know the people who manage the brokers for the big electricity suppliers.  We have discussed this at length when we were thinking of including reverse auctions into our business model.

2. For customers with 1,000,000 kWH to 10,000,000 kWH of electricity usage, the broker gets custom pricing, as ANY broker would do.  All suppliers need to provide custom pricing based on your load profile at this level.  Again, the broker with the reverse auction platform feeds the custom pricing into the web system, the prices are inflated and the same scenario takes place as it did for the customer in #1 with less then 1,000,000 kWH.

3. For customers with more than 10,000,000 kWH/year in power usage, they will really experience a true and honest reverse auction, because it is worth the time for a supplier to put the time and energy into it. But, guess what?  Those suppliers know what their bottom line price will be, regardless.  They enter that price as the lowest they will go.  They start at a high price that is 30% more than their lowest price.  The customer has the excitement of watching the price go down.  They are proud of how smart they are to have used a reverse auction.  They get a pat on the back from their boss.  But what they don’t realize is that the price they ended up with is not necessarily the best price they could have gotten elsewhere.

You see, despite what you hear, personal relationships still make a difference.  Better Cost Control works with all the suppliers to manage the bid process.  We then talk to them and make them bid against each other.  We know their profit margins.  We know the people are are bidding.  They know how much business we bring them.  We use our personal relationships and industry knowledge to get the customer the very best price.  Talk to the pricing people at the actual electricity suppliers and you’ll hear the same thing.  Don’t trust the man behind the curtain.  Better Cost Control will do a better job of controlling your energy costs.

 

Natural Gas and Electricity Prices Are Trending Upward

Natural gas prices have very quietly trended up over the past three months pulling power prices along for the ride.  With NYMEX prompt month gas just above $3 as this article was being written, many seem to be putting the value in historical perspective. But relative to recent prices, $3 represents a substantial move.  During this stretch, September natural gas prices have risen over 36% and one year forward, beginning September, have increased over 17%.  For a commodity that has seen its value plummet so dramatically and for such a prolonged period, this 3-month gain represents a stark change and one that should have garnered more attention than it actually has.

Storage has helped fuel this run as many of the recent summer injection levels are down from previous year, week-in-kind volumes.  Despite the lower build, end of injection season levels are still forecaste to be at all-time highs.  Rig counts continue to fall and over the past nine months, they have decreased by nearly 50% -contributing to the smaller storage builds and price increases.  As prices rise and as we near the winter season, the rig decline could reverse course.   The approximate 10% year-over-year contango in the forward market displays the general market consensus that the future will hold higher prices, but a similar or stronger contango has existed over the past several years throughout a majority of the price decline.