Energy Market Update
Electricity Markets

As ERCOT deals with industrial load growth, it continues to be a factor in their volatile electric market. Experts are trying to access what their needs will be into the future. The steady increase in oil prices recently and upward pressure on natural gas has contributed to the hook up in ISO-NE electric prices. NYISO & PJM were pretty stable week over week.
Both NY and NE continue to set aggressive renewable goals and new regulations. However, as we become less dependent on fossil fuels, this will destabilize the market and there will likely be some volatility around getting there. Renewables are not an equal substitute or source of capacity. Although the market situation was slightly different, the potential reaction is similar to when coal plants were closing in ERCOT last Spring and capacity during that time was at risk. When the considerable amount of plants were closed that took capacity out of the market a sharp reaction resulted.
Power Management Company Sponsors Gavin Hall as he makes his Professional Debut
Rochester, NY- July 26, 2018- Gavin Hall, a Pittsford, NY native and University of Texas alumni, made his European Tour debut today in Hamburg, Germany at the 2018 Porsche Open. Hall’s appearance on the PGA EuroPro Tour will be his first start after being sidelined with an injury for the past 7 months. Power Management is a local sponsor for Hall and looks forward to supporting him during the 2018/19 professional season.
Continue reading “Power Management Company Sponsors Gavin Hall as he makes his Professional Debut”
Press Release: Website Launch
POWER MANAGEMENT COMPANY ANNOUNCES LAUNCH OF NEW WEBSITE
Power Management introduces a new website, more effectively conveying their core services to users
Victor, NY- May 21, 2018 – Power Management Company (PMC) is proud to announce the launch of their new website www.powermgt.com.
The new site more clearly illustrates the services Power Management offers such as energy management, energy procurement, and energy efficiency and sustainability. It delivers both current and prospective clients with an opportunity to see the full product portfolio and explore topics beyond the core energy services; learning more about things like the lighting solutions and solar project work they provide. The redesigned project pages feature their impressive solar case studies as well as before & after pictures of their LED lighting projects.
The update has a sharp new professional look and feel that is more visual and modern. It references some of the main industries that Power Management serves such as manufacturing, healthcare, education and real estate. The company’s identity is more clearly defined and the homepage rings true to the values PMC offers to clients; an approach that is strategic, business-minded, personal and long-term.
The site navigation has been revamped to group the common services under similar categories. The content of the new website has also been expanded greatly in an effort to provide viewers with more information about energy and how it relates to their business.
Another important update that Power Management made to their new site is upgrading to a more mobile responsive platform. With user experience and access in mind, the website has been designed using the latest technology so the site is compatible with today’s browsers and mobile devices.
New sections to the site have been added like customer testimonials and a NYMEX settlements chart which will be updated on a monthly basis. Many things will remain the same, like space for the weekly energy news updates, and an easy form for contacting the company. Access to Power Management’s major social networking sites like LinkedIn (https://www.linkedin.com/company/power-management-co-llc/) will still be available. The site also features some of Power Management’s client relationships including Frontier Communication, 84 Lumber and Kinney Drugs.
Power Management anticipates the new site will provide visitors with a more user-friendly and valuable browsing experience.
About Power Management Company
Power Management provides energy management and sustainability services to a diversified customer base. Founded in 1997, Power Management currently manages over 24,000 commercial and industrial utility meters throughout North America, taking energy management to a higher level through a comprehensive process that includes research, recommendation and implementation. To learn more about Power Management and what energy services can benefit your business, contact Joanne Sinopoli at (585) 249-1360 or go to www.powermgt.com.
Evaluating Swing Contract Options
When evaluating natural gas contracts, one component that you may consider is the suppliers offering of swing options. Swing refers to your business being able to go above or below the amount to be supplied, while still being billed or credited for any used/unused volume at your fixed or index price. Sometimes also referred to as “contract quantity”, the variance in swing ranges from 0-100%, while most suppliers will give you the option to have 0% swing, 10% swing or 100% swing.
Typically, if you choose a 100% swing option, also called “full requirements,” you may go above or below your amount to be supplied and still be billed at the contract price for the volume used. Adding at least some level of swing to a gas contract provides a level of protection for customers who are unsure of their volume requirements or expect that it may change, as well as those who have low risk tolerance for price fluctuations. Generally a premium is built into the fixed price to cover these usage fluctuations and that premium would likely be higher for a full requirements product than for a product with 10% swing.
Conversely, businesses that choose a product with no swing (0%) could see initial contact prices that may look slightly lower, but keeping in mind if you deviate from the projected volumes you could incur monetary penalties for going above or below the estimated agreed-upon amount to be supplied. When a contract has a 0% swing option, the supplier is putting the responsibility and risk on you as the customer. Volumes from year to year could vary for a many reasons including using more or less of a current facility, expansion plans, or possibly most common based on the weather. Especially the last 4 years or so, the weather has been anything but normal. If you do consider a no swing contract, it would be important to evaluate your usage based on a weather normalized schedule to ensure you are prepared for any variations.
There may be some occasions when 0% swing could be a good option, such as if your business has a very predictable load (i.e. an industrial facilities with a flat load that doesn’t vary). As the needs and patterns of each business are different, when assessing contracts on behalf of our clients swing is definitely something that Power Management takes into consideration and discusses with you.
New England Capacity Market Changes
The price consumers pay for electric supply is made up of a series of components. Although the price of wholesale energy is often the focus, it is actually only a portion (recently 50% or less) of the overall cost. One element that has recently increased significantly, especially in the New England market, is capacity.
Capacity prices are set through periodic auctions where New England power plant owners bid to assure that there will be enough generating capacity on the hottest and coldest days. The bidders compete with each other and set capacity prices three years out. This forward-looking, market-based method ensures that New England will have adequate resources to meet all electricity demand plus reserve requirements well into the future. Recently, the spike in forward capacity settlement prices reflect the closure or planned closure of several older coal, oil and nuclear power plants. Another factor impacting capacity prices is the increase in renewable generation. Although renewable generation resources results in lower energy prices at times along with positive environmental effects, it unfortunately does not provide significant levels of capacity to meet peak loads which results in higher capacity prices.
When analyzing forward market opportunities and arranging future electric supply contracts; consider the impact of not only energy prices but also capacity costs. While energy can move up and down with market conditions such as weather, a decision must be made as to accept the risk by letting the price vary or reduce it by fixing all or a portion of the price. Capacity makes up a large portion of the price and is an indisputable charge that has already been set by ISO New England and will not change with variations in the price of energy.
The chart below shows the capacity price for various ISO-NE regions. As you can see there was a large increase in capacity in June 2016 for the NEMA Boston region and an even more drastic jump in June 2017 for all areas.
RO NEISO (Rest of ISO-NE), NEMA (Northeast MA) SEMA/RI (Southeast MA/Rhode Island)
Outlined below is a comparison showing the components that make up the cost of electric supply. Capacity is shown in red, which in forward markets will account for about 21% of the overall price, compared to 13% historically.
Important Direct Energy Account Changes
As your chosen energy consultant, we would like to provide a reminder that Direct Energy, your current supplier, will be conducting a final consolidation of their electricity billing systems. This transition will mean some changes for your accounts as a customer. However, please note that ONLY customers who are currently being dual-billed will be effected (meaning one bill from your utility and a separate bill from Direct Energy your supplier). You should also be receiving correspondence from Direct Energy regarding these changes; however we wanted to make sure you were informed in advance so we could provide assistance in the event of any questions or concerns.
It is important to note that due to these billing system changes, this may trigger your local utility company to send you a notice indicating that you are being dropped from and re-enrolled in electricity supply service with Direct. This notice can be disregarded, as it pertains to a change in entity on Direct’s part and has no impact on your contracts or accounts.
Some other changes you should be aware of include:
- You will have a new billing account number and a new payment address. This will need to be changed internally or with your accounts payable department.
- You will be able to pay your bill over the phone and online. If you wish, you may also elect to have paperless billing.
- Your invoices will have a new format. Direct should be sending an additional sheet explain how to navigate the invoice changes.
- Account information will continue to be available via MyAccount, with some expanded options.
As always, Power Management works to keep you informed of any modifications to your energy accounts. Please feel free to reach out to your Account Manager at (585) 249-1360 with any further questions regarding these new changes.
Update Regarding Supplier Changes
Electric and natural gas suppliers are constantly changing and evolving their business. Power Management is here to assist with these sometimes complicated transitions and work on the customers end to straighten out the details. We wanted to remind you of some changes that a few suppliers will be implementing that may have an effect on your billing over the next couple of months.
In February/March 2017, Direct Energy will be conducting a final consolidation of their electricity billing systems–and the legal entities associated with them. You may remember hearing about this when the first round of customers started transitioning to the new system in late summer. This consolidation impacts only dual-billed electricity customers. It is important to take note of this change as sometimes moving customers to different billing platforms triggers the local utility company to send customers a notice that they’re being dropped from and re-enrolled in electricity supply service. You can disregard this notice if you receive it as it pertains to a change in entity and has no impact on your contract or bills. If you fall into this customer category, you should be notified by Direct Energy via mail and/or email.
Also as mentioned in this week’s Energy Market Update, Constellation Energy has started the transition of acquiring ConEdision (ConEd) Solutions. As a result, any customers currently served by ConEd will soon be receiving correspondence from their new supplier Constellation regarding the switch. As we communicated when this announcement was first made, all contracts and terms will be honored as originally signed. For mass market, commercial and industrial customers, the billing and contract transition period is currently expected to be as follows:
· NYISO- June 2017
· ISO-NE- June- September 2017
· PJM- June- November 2017
· ERCOT- October 2017
As always, if you have any questions on either of these recent changes, please reach out to your Account Manager here at Power Management.
Weather, Storage Inventories and other Natural Gas Price Factors
Weather and natural gas storage inventories are two variables that are often discussed when analyzing current natural gas prices and where they are anticipated to go.
Earlier this year, working natural gas inventories ended the winter heating season at 2,478 Bcf. This exceeded the previous record high of 2,473 Bcf set in March 2012, which again followed a warm winter. Due to record warmth during the winter season and continued high levels of domestic natural gas production, inventory withdrawals during the traditional heating season (November through March) were relatively limited. Analysts expected to end the injection season with record high levels of natural gas in storage moving into the next winter season. However, after the unseasonably warm summer we had in 2016, inventories which usually grow at a rapid pace during this time of year, have not increased at the normal rate due to elevated cooling demand. As we close in on the completion of the normal injection season which generally runs through the end of October, working gas in storage currently stands at 3,551 Bcf as of Friday, September 16, 2016. Although stocks are 140 Bcf higher than last year at this time and 268 Bcf above the five-year average of 3,283 Bcf we are still much below the expected levels based on where we started.
In addition to the weather and storage levels, other supply and demand factors also influence natural gas prices:
Factors that may affect prices on the supply side:
- Variations in the amount of natural gas production
- The volumes of natural gas imports and exports
- The amount of gas (storage levels) in underground facilities
Factors that may affect prices on the demand side:
- Economic conditions
- Variations in winter and summer weather/temperatures
- Prices of competing fuels
Increases in supply tend to pull prices down, while decreases in supply tend to push prices up. Likewise, higher demand tends to lead to higher prices, while lower demand can lead to lower prices. As we enter what generally is a more volatile period for energy prices, it’s important to keep in mind the different elements that may affect the market and put a strategy in place to protect your business from unpredictable variables.
RRHA Joint Ventures Corporation Partners with Power Management Company
RRHA/JVC and Power Management’s shared visions for this partnership are to enhance member options by providing them with competitive pricing, ongoing cost management and comprehensive energy strategies. This new collaboration draws on the distinct strengths of each company: PMC’s extensive knowledge of the energy markets, proven 18+ year history in the industry and the aggregation power of more than 22,000 commercial and industrial client accounts; and, RRHA/JVC’s impressive collection of member institutions that are committed to the organization and benefit from its many member services and group purchasing arrangements.
For many RRHA member organizations, maintaining an accurate and controlled energy expense line is a critical need and evaluating all alternatives can be both difficult and time consuming. Power Management assists in managing energy risk by providing clients with solid, methodical, and accurate foundations for market assessment, competitive pricing, budgeting, and a spectrum of energy consulting and advisory services. Power Management’s comprehensive, unbiased approach to energy management, will allow member companies the opportunity to achieve new levels of efficiency, effectiveness and cost control.
“We believe this new opportunity for our members is a great fit. The experience that Power Management brings along with the invaluable relationships they hold within the energy industry will give our members more choices when it comes to their energy strategy” said Joel Lincoln, Senior Vice President -Supply Chain Solutions, RRHA/JVC. “Our staff is eager to engage with the members of RRHA. From our strengths in procurement, to energy efficiency and sustainability, we will be able to deliver substantial value to many of the organizations” added Eric Douthit, Executive Vice President, Power Management.