NY regulators establish regulations to protect electricity customers

The NY Public Service Commission recently ruled that non-utility energy marketers must guarantee cost savings or provide electricity from renewable sources if they sell energy to residential or small commercial customers.

The commission said its new rules for energy service companies, or ESCOs, stem from a broad investigation that discovered what many consumers have complained about for years: Significant over-charging is rampant among some of the marketers.

“We have heard from too many consumers that they were unfairly lulled by aggressive and dishonest ESCO marketing into believing they were getting savings that they did not receive.”

In a recent review of the industry, the PSC determined that some customers are being grossly overcharged.

With this PSC decision, energy service companies that market to residential customers must provide written guarantees that they will charge less than the utility. The exception is for green energy. Energy marketers can charge higher prices for electricity that is at least 30 percent derived from renewable sources. The PSC will review whether exceptions should be made for other residential services sold by energy service companies, such as energy efficiency.

The commission said it will strengthen its process for revoking the eligibility of energy service companies to do business in New York if they are found in violation of state regulations. The PSC is also reviewing other options, such as imposing stiff financial penalties on companies that violate the rules.

Now is the time to contract Electricity and Gas

EMEX

Prices for electricity and natural gas are nearing record lows, making this a great time for customers to purchase their power ahead of time.

This is due to several factors, including a warmer-than-average weather outlook for spring, a surplus of natural gas supply and a pull-back in power prices.

Here’s what you need to know.

Warmer Weather Is Reducing Demand

For those living in the snow-covered regions of the Mid-Atlantic and Northeast, it seems hard to believe this winter has been relatively mild compared to last year and warmer-than-average temperatures are on the way. It’s true that last November was the coldest since 2000 and the eighth coldest nationally since 1950. However, this was followed by a warmer pattern in late November and early December. While certain regions have clearly had cold snaps throughout the winter, they haven’t been as widespread and long-lasting as the cold we experienced during last year’s Polar Vortex.

This means demand has fallen compared to last year, contributing to lower prices.

Now that the worst appears to be over and spring is just a few weeks away, the National Weather Service is forecasting a warm spring for the West, Mid-Atlantic and Northeast regions and a warmer-than-average summer along both coasts.

Natural Gas Surplus Keeps Prices Low

Withdrawals from natural gas storage continue to be well below what we experienced last year. In 11 of the last 13 weeks, natural gas withdrawals were smaller than last year. We saw a brief uptick in January, but recovering production and inconsistent demand for heating kept more natural gas in storage. Unless temperatures remain cold through March, we’re on pace to end the season with a surplus.

By contrast, last year’s heating season ended with a deficit in natural gas supply. The elimination of that deficit cut natural gas prices on the NYMEX almost in half. This historical correlation between the gas storage surplus and deficit and the NYMEX 12-month strip, as well as estimates of end-of-season storage, suggest prices could fall even lower this spring.

Gas Consumption Will Reach An All-Time High

With natural gas prices this low, we can expect power companies to use more natural gas and reduce their reliance on coal. We’ve seen an upward trend in natural gas consumption by power companies for the past decade, but now it’s on track to reach record levels, according to the Energy Information Administration.

Gas demand in the power sector is 6 percent higher than in 2014 and 16 percent above the five-year average level. More power companies are retiring aging coal plants and replacing them with natural gas units.

We can also expect to see a greater reliance on natural gas in the West, as less available water creates a decreased reliance on hydropower. In late January, snowpack levels were only about 25-40 percent of what they are normally are, and a weakening El Nino looks to be bringing less rain, which could create a drought in early spring.  During a good water year, hydropower can contribute to up to 30 percent of the power generation mix in the summer, which isn’t likely to happen this year.

As power companies consume more gas and production tapers off in 2015, we should expect to see natural gas prices eventually bottom out.

Now Is the Time To Buy

As natural gas prices continue to fall, long-term power prices, too, are within 1-2 percent of all-time lows. Since the start of the winter, prices have been down an average of $5.49 per mWh.

Taking advantage of these low prices now by purchasing a portion of your energy in advance can help offset the rising costs of capacity and transmission, which are occurring as power companies retire aging plants and build new infrastructure.

BCC offers a variety of energy pricing options, including the ability to lock in prices over the term of your contract, make smaller purchases over time based on market fluctuations or use a combination of these strategies.

Our energy management experts can help you identify the right solution to meet your needs. We also offer a variety of energy management tools that allow you to monitor prices and make smarter purchases based on the market.

Learn more about how you can be a proactive energy consumer with our pricing options and energy management tools—contact us today.

NY Electricity Prices Skyrocket Due to Weather and Gas Prices

Cold and Electricity PricesNew Yorkers looking at their electricity bills across the state are going to be facing sticker shock. Electricity prices jumped last month by more than 50 percent on average statewide, fueled by cold winter weather and surging demand for natural gas, which is used to generate much of the state’s electricity as well as for heating.

And the electrical price spike came ahead of the dreaded polar vortex that put the state into a temporary deep freeze this month. So next month’s electric bills might also be high.

Electricity prices in the state track natural gas prices very closely.  Since electricity prices in New York change every month, customers without competitive fixed price supply contracts may wish that they had those contracts.

In New York, a megawatt-hour of electricity (enough to power 1,000 average homes for an hour), sold into the ISO for $66.39 in December, up 53 percent from the month before, when it sold for $43.27, according to NYISO. During that same period, the price of natural gas in the state spiked by 46 percent.

Such gas-driven spikes in electric rates during winter months are not unusual, according to a NYISO statement. “The markets experienced similar price increases in January 2011 and 2013. In contrast, the winter of 2012 was relatively mild, which eased the demand for natural gas and prices remained low,” according to the statement.

NY utilities now simply gets the power that they sell through NYISO, which itself operates a system where plant owners bid in the price of their power hourly, daily and in advance.  This is essentially the same as a customer that purchases an LMP index contract from a competitive supplier, which offers no price protection.

Utilities try to hedge against price spikes by buying access to some power in advance when prices are lower, but 90 percent of the electricity sold by utilities is obtained through short-term market run by NYISO.

During the winter, retail residential, commercial and industrial gas customers have priority on gas supplies to meet heating and commercial needs, according to NYISO. During cold spells, that demand competes with the growing demand for gas as a fuel for power plants, and pushes up the price.

December was a bit colder than average, according to the Albany office of the National Weather Service. The average temperature was 27.6 degrees, which was nearly a full degree below the average for the month.

But November was even cooler. The month averaged 37.2 degrees, about 2.5 degrees below normal.

This month, the state set a record for electricity usage on Jan. 7 during the vortex-induced cold snap, as the electricity demand reached 25,738 megawatts — breaking the previous peak winter demand record of 25,541 megawatts set Dec. 20, 2004, according to NYISO.

Nationally, natural gas prices rose 35 percent in 2013, and the federal Energy Information Administration had predicted home heating bills to increase 13 percent this winter for natural gas customers across the country, with users of home heating oil seeing a 2 percent decrease.

If you don’t have a fixed price electricity or gas contract for your business, maybe it’s time to think about that!

New York Capital Zone Electric Rates Nearly Double in Jan and Feb 2013

Nimo Pricing

Electricity customers in the  National Grid NiMo Zone F (Capital Zone) have seen their rates skyrocket in Jan and Feb  from ~$0.06 to over $0.12 per kWh.

In the 2012 Tariff Filing Letter, the proposed action states that:

“The Public Service Commission is considering whether to approve or reject, in whole or in part, revised tariff leaves filed by Niagara Mohawk Power Corporation d/b/a National Grid (“Niagara Mohawk”) that would increase the Company’s electric and gas base delivery revenues by $130.7 million and $39.8 million, respectively, effective April 1, 2013, and make other tariff amendments and accounting changes.”

Customers in Upstate New York should understand that fixed rates are in the $0.055 to $0.065 range for 12 months.  You can completely eliminate price fluctuations by contracting your electricity supply instead of dealing with the volatility of monthly pricing.

To obtain a fixed price electricity price quotation, contact Better Cost Control.  We represent all the suppliers, so you can be assured of the lowest prices with the best contract terms.