Comparing January 2018 LMP Prices to the Last Polar Vortex

 

By Michael DeCaluwe

January 17, 2018 – Taking a look at this year’s index power prices vs. those we saw in the last polar vortex, most markets are mirroring what we saw then.

At that time, prices rose higher as the cold continued. We’ve seen the same initial burst of cold weather this season. If this cold is prolonged, we might see prices exceed those we saw at that time.

What rising prices mean for your company energy strategy.

Those that are on index pricing might want to look at fixed prices to protect your remaining winter energy budget.

Similarly, companies on a fixed energy product may review fixing future volumes because any stress on current supply pictures might have a long-term bullish effect on pricing.


Any questions? Contact one of our Strategic Energy Advisors at 630-225-4550 to discuss your company’s natural gas strategy.

Illinois School Districts on Energy: To Group Buy or Not to Group Buy

By Becky Thompson

January 15, 2018 – As an Illinois public school administrator, you hold an enormous amount of responsibility for your district. You have a finite budget, and what you spend is public knowledge. With that kind of transparency comes the expectation to spend it responsibly. No pressure, right?

Considering that schools in the US spend $8 billion annually on energy (more than textbooks and computers combined), proper management of your energy is essential.

But with so many options available, how do you know what’s best for your district?

We could spend hours explaining different products and buying strategies. But let’s focus for now on one of the biggest questions facing most public schools and how they purchase energy.

Should I use a buying group or an energy advisor?

When natural gas (and later electricity) became deregulated in Illinois, the market flooded with options – some good, some not. As with most new things, this opportunity brought uncertainty.

Enter buying groups (aka consortiums).

Making decisions with energy buying groups.

Buying groups offered a host of benefits, including:

  • “Bulk buying” meant leveraging buying power, presumably achieving lower rates.
  • Feeling of less risk through group-made decisions. (i.e. the “group mentality”)
  • Less individual responsibility to watch the market and identify actionable opportunities.
  • Easy transaction. The group coordinators pick a supplier, present options, and school administrators sign and return the paperwork.

Buying group drawbacks.

As the market matured, districts began to shift towards brokers and independent energy advisors.
Former consortium members found that:

  • More buying power did not necessarily mean lower rates, but it did mean socialized costs. Not all accounts in the group received an A+ for their energy use. (Translated: higher costs to all in the group.)
  • They were sometimes put in a position of more risk by not having control over when the group went to market.
  • Advisors still watched the market and kept the responsibility off the district’s plate. But opportunities were individualized and more meaningful to the district.
  • The buying groups focused solely on supply, leaving the district administrators to figure out efficiency measures and revenue-generating demand-side programs.

Do your homework on what energy strategy works best for your school district.

As for whether or not to use a buying group to purchase your district’s energy, that is a decision only you can make for your district. You know your schools better than anyone and have to make choices in your best interest.

Just remember to take into account all factors and do your homework first. If nothing else, speak to an energy advisor to check out all of your options before jumping into any long-term commitments. You might just walk away with a cost-saving strategy that gives your budget some breathing room.


About The Author

Becky is a Strategic Energy Advisor specializing in the public sector, including schools and municipalities. She has been in the energy industry for over five years, working from the ground up as an account manager and then as an electric pricing team lead. Her background knowledge of the inner workings of an energy company helps identify actionable strategies for making her clients’ energy strategies both easy and cost effective. In her free time, Becky enjoys any activity that requires being outside and making her son belly laugh.

Becky can be reached via email at bthompson@naniaenergy.com or phone at 630-225-4561.

Index Power Price Alert – January 2018

Locational Market Price Chart - January 2018

By Michael DeCaluwe

January 10, 2018 – For those that have their electricity service priced under an index agreement, you have seen record low costs throughout 2017 due to our unseasonably mild weather over this past year.

However, the brutal cold we saw at the end of 2017 sent index prices soaring to some of their highest levels in almost 3 years. Those hit particularly hard were clients in New England, New York, Pennsylvania and Maryland.

Long-term, index rates have still been far lower than fixed rates. Clients that can take the risk can often benefit from this product, but the above illustrates “Murphy’s Law” with respect to how high index rates can get during periods of volatile weather.


Any questions? Contact one of our Strategic Energy Advisors at 630-225-4550 to discuss your company’s power strategy.