05/17/2008
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EnergyWindow MarketElert TM - October 2004
www.energywindow.com
October Elerts
FirstEnergy Ohio -
FirstEnergy will be allowed to collect a Rate Stabilization Charge until the end of 2008 that virtually duplicates transition charges that were to end in 2005. Shopping credits will remain low and large non-aggregated end-users will need to give one year's notice to switch suppliers. More details at
FirstEnergy RSP Summary.
Colorado Moves to Monthly Gas Cost Adjustment -
The Colorado PUC approved Xcel Energy's request to adjust gas cost monthly instead of annually. The monthly price will be based on the seventh business day of the month NYMEX Henry Hub settlement price for the following month, basis adjusted to the Colorado Interstate Gas (CIG) Rocky Mountain price, plus upstream service, gas demand, and deferred gas costs, which will be set annually. For complete details, see
Excel Gas Ruling.
Wholesale Markets Continue to Consolidate -
Allegheny Electric Power and Dayton Power & Light Co. transferred control of their transmission to the PJM Interconnection at midnight on Friday October 1. PJM now serves 44 million people with almost 108,000 MW of peak power. Dominion Virginia Power and Duquesne Light in Pennsylvania are slated to join the interconnection within a few months as well. More at
PJM AEP-DPL Release.
Natural Gas Futures Defy Logic
The run-up in natural gas futures prices from February to July of this year dampened opportunities for savings in many deregulated markets in the U.S. However, a reasonably mild summer and encouraging storage reports managed to produce what many experts predicted - a downturn moving into the heating season. Even a brace of early-season hurricanes had little effect as they skirted the Gulf region. Gas buyers that fixed prices for 12 to 24 months during the second week of September (when the 12-month strip dipped below $6.00/mmBTU) patted themselves on the back. But then along came Hurricane Ivan, and with it a reduction in weekly gas production estimated at about 19 billion cubic feet (Bcf) per week.
Still, storage levels are at near-record highs and, with three more weeks to go in the season, many experts expect the storage figure to top the 3,200 Bcf mark for the first time in the history of weekly reporting.
Yet, driven by concern over longer-term production problems, a colder-than-average winter and steep rises in crude oil prices, natural gas futures have risen beyond record levels to close above $7.00 for a 12-month strip. The above chart clearly indicates this exorbitant rise, and also charts the associated rise in the PJM electricity futures market.
In the meantime, physical prices for gas have risen, but not nearly as sharply as the futures, leaving some analysts scratching their heads. Sudden increases like this, disconnected so clearly from the fundamentals, might even spark scrutiny from federal regulators and/or the SEC.
There is a silver lining to this cloud, however. Some natural gas suppliers are reporting that their basis prices have come off recently, meaning that now may be the time for buyers to fix a basis price going forward and, if an adjustment in gas commodity prices is forthcoming, to lock in a fixed price quickly when the opportunity presents itself.
Fall Market Roundup - Hunting for Hotspots
Though no huge, new markets are expected to open up for retail electricity in what remains of 2004, and gas prices have reached record highs (temporarily, we hope), there are still a number of potential hotspots for electric savings in the waning months of the year. A summary of these is available at
Market Summary.
Quick Buyers' Tip
Competitive auctions now determining default pricing in states like New Jersey, Connecticut, Maryland, Maine, Massachusetts, Duquesne, and possibly FirstEnergy in Ohio. Most have retail adders or administrative charges that add something to the bid prices. Consider shopping for your accounts at about the same time as the auction is held, and you will be more likely to be able to save money than if you wait and the markets move higher after the new prices are fixed.
Copyright © 2004 EnergyWindow, Inc. All Rights Reserved.
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