 |
EnergyWindow MarketElert TM - January 2005
www.energywindow.com
January Elerts
Ontario -
Bill 100 has been given Royal Assent, meaning that current two-tiered pricing for smaller customers will be replaced by a new regulated price plan (RPP) beginning in April. Larger customers will see changes to the current spot market pricing system that will more accurately reflect actual market prices. Final details are due March 1.
Washington DC -
The Washington DC Public Utilities Commission has extended the shopping period for electric accounts in the PEPCO Washington, DC area that wish to avoid higher utility rates in 2005. The deadline is now the close of the third billing cycle after February 8, 2005.
Massachusetts -
The clock is ticking down on Standard Offer rates. They end February 28th and will be replaced by Default Service rates more closely matched to wholesale prices (see article below).
Making Sense of Moving Markets
As the impending extinction of Standard Offer rates in Massachusetts illustrates, the era of fixed rate electric tariff rates is quickly passing. Electric rates in many EDCs today are now set several times a year, monthly in others and, in the case of larger accounts in New Jersey and Maryland, hourly. Buyers seeking the solace of a fixed price are now faced with a dilemma: What is a good price? How will it compare with utility rates over a year or more?
Determining those answers requires new analytical tools to support buying decisions. The inset chart presents one such tool for projecting utility rates in Massachusetts Electric Company (MECo). In it, we used the actual monthly default prices from 1998 through 2004 (broken magenta line) and regression analysis to generate a trend line illustrating expected future values (orange line). We then plotted a dotted-blue line showing values for a targeted confidence level of 70% that the contract price would beat the actual price in each year of a 3-year contract. The yellow line represents a fixed-price bid of $69 remaining steady over the three-year term. The purple bars in the lower corner show the expected $/MWH value of the savings in each year of the proposed contract term. The trend clearly suggests default prices will continue to increase over time. The confidence that expected savings will not be overcome by short-term reversals in the trend are much greater with longer term (2-5 year) than with shorter term contracts. In addition, the longer term contracts provide greater budget certainty and reduced procurement effort and cost. More details in the "Making Sense of Moving Markets" white paper.
Quick Buyers' Tip
Be prepared - January is a good time to take a look at what's coming up in terms of contract renewals, new markets, changing regulations, etc. Develop a plan of attack including a timeline for action by market, and remember to include time for contract negotiation and utility switching deadlines. Also be careful to watch for return to tariff restrictions for returning customers (minimum stays or hourly pricing in particular). Treat your timeline as a reminder of when you must take action, but monitor wholesale markets routinely and be ready to go to market when and if the opportunity to sew up a given market at a good price presents itself.
EnergyWindow® Urges DC-based Businesses To Act Now To Avoid Electricity Rate Increases of More Than 23 Percent
EnergyWindow offers advice and online services that enable businesses to beat energy-buying deadline.
Free Market Data and Information Available Here!
EnergyWindow has a wealth of free energy data and information available on our site. Simply follow the link above, register if you haven't already and you'll get instant access to wholesale and spot market energy prices, a searchable database of energy-related articles, links to energy career sites, supply reserves, weather, securities information, the MarketElert archives and much more. It's all there, available 24x7 and, best of all, it's free!
Copyright © 2005 EnergyWindow, Inc. All Rights Reserved.
|
Was this newsletter useful to you?
Please click here to register your opinion.
Refer this newsletter to a colleague.
Please click here to forward a copy.
|
 |
|