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EnergyWindow MarketElert TM - June 2006
www.energywindow.com
June Elerts
FERC Approves New England Capacity Rules -
FERC commissioners have unanimously approved a plan intended to ensure New England will have adequate generation and transmission lines in the future. The proposal will increase electric rates (to pay for the facilities needed), but less than the LICAP plan previously favored by FERC. The agreement will result in the holding of an auction every year in which ISO New England will analyze and present New England's electricity requirements for the following three years and seek bids from companies to build the necessary infrastructure.
Maryland Auction Put on Hold -
Maryland's PSC has postponed an auction scheduled for Monday, June 19 to provide 1,445 mw of electric generation for Type IIa commercial customers (ranging from 60kW peak demand in Allegheny Power and Delmarva and 100kW in Pepco and BG&E to 600kW overall). The auction is for full requirements Standard Offer Service for delivery after the summer months until next May. The postponement is to provide time for suppliers to absorb changes in auction rules that are part of SB1, a bill to reduce the impact of new rates on residential customers in BG&E territory. The bill, which also fires the PSC and People's Council, was overridden by state legislators after being vetoed by Governor Ehrlich.
Massachusetts and New Hampshire -
National Grid has obtained approval for new rates in Massachusetts and New Hampshire. The average increase in New Hampshire (formerly Granite State) is 31% over the same time last year (Aug, Sep, Oct are 34%, 24%, and 35% respectively). In Massachusetts (Massachusetts Electric) the new rates are averaging 26% over the same period last year ranging from 17% in WCMA to 37.5% in SEMA.
Markets to Watch
End-users have come to the realization that they must continuously "shop" in the sense of watching wholesale power markets and tracking broader trends. In addition to markets that are going full blast right now (Massachusetts, New York, Texas, Maryland, Delaware, New Jersey and ComEd Illinois are among the most active), several markets are predictably going to heat up toward year end. Here's a list of some of them you should start thinking about now.
Illinois -
Though Com Ed tends to get the lion's share of attention in Illinois, the three Ameren utilities will also have their new rates set after December 31st by an auction held later in the year. Suppliers have been frustrated in years past by the inability to acquire transmission, but recent changes, including the establishment of the Midwest ISO have improved the situation and several players are girding up to do some aggressive marketing there. See
http://www.ameren.com/AmerenPost2006/adc_Post2006FAQs.asp.
Connecticut -
While stakeholders wrangle over the specifics of how often to buy power and for what percentage of load, January 2007 will bring with it some significant increases for Connecticut businesses. Some estimates call for increases of 10-20% in CL&P territory and 40% or higher in United Illuminating (UI). Two types of default service will be sought via RFP - Standard Offer Service (SOS) for accounts with demand less than 500 kW and no demand meter, or Supplier of Last Resort (SOLR) service for larger accounts.
New Hampshire -
Standard Offer Service and Default Service ended in New Hampshire in April, and new rates vary monthly except in Public Service of New Hampshire which has a one-year rate augmented by an adjustment in the summer if necessary. Only 30% of PSNH's rates are bought from wholesale markets (as opposed to generated by their own facilities) but even so there has been significant shopping there with some reports detailing savings of up to one cent/kWh. One caveat: PSNH has now put in for a 7% discount on their rates based on over-collection in the past. National Grid (Granite State) has just had significant increases approved (see the Elert above).
Montana -
NorthWestern Energy is moving forward with a plan to buy power for Montana retail customers via wholesale auctions when long-term contracts with PPL Montana expire next year, despite strong opposition from the state's consumer counsel. Montana enacted electric deregulation legislation in 1997. Montana Power Company (MPC) and PacifiCorp are now deregulated. The other major investor-owned utility, Montana-Dakota Utilities, which provides power in parts of eastern Montana, is exempted.
Pennsylvania -
Penn Power's transition period ends at the end of 2006, and the PA PUC has adopted a plan to obtain Provider of Last Resort (POLR) service from suppliers. The plan will provide consumers with POLR service from Jan. 1, 2007, through May 31, 2008. The PA PUC is bound to adopt a plan that sets rates according to prevailing market prices and that will allow the utility to recover its cost of service so incurred See
http://www.puc.state.pa.us/general/press_releases/press_releases.aspx?ShowPR=1509 for more.
Quick Buyers' Tip - Fixed-Price Points
With the kind of volatility we've witnessed over the past year, the prospect of a multi-year cycle of destructive storms, geo-political instability in the Middle East, structural deficiencies in our energy delivery systems and general tightness in supply predicted, end-users need to take a moment and assess the attractive features of a fixed price contract, apart from savings. Yes, fixing a price over time tends to be a wise move in terms of absolute costs (provided you don't pick the crest of a price-wave to do so). But fixed prices also 1. Eliminate volatility, 2. Eliminate seasonality, 3. Make it effortless to budget, and 4. Provide for more even cash-flow. If you choose to go with terms of four or five years, you will also be likely to benefit from the discount that is almost always built into more distant future prices.
Shopping for Energy Bargains: Strategies for Savings
STORES magazine talks to JC Penney and EnergyWindow about ways to soften the impact of rising energy costs and protect the retailer's bottom line. (http://www.stores.org/archives/2006/4/edit20.asp)
Integrating Energy Procurement Into Your Supply Chain Strategy
Businesses ignore the cost of energy - one of the top operational expenses - at their own peril. A new EnergyWindow white paper takes you through the steps required to fully integrate energy into your overall purchasing strategy. (http://www.energywindow.com/press/PowerStrategy-StrategicSourcingOfEnergyWhitePaper.pdf)
Free Market Data and Information Available Here!
(www.energywindow.com/decisionsupport.shtml)
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 24 hours a day, 7 days a week - and best of all, it's free!
Copyright © 2006 EnergyWindow, Inc. All Rights Reserved.
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