Newsletter Apr 2014
THANK YOU FOR YOUR BUSINESS!
Welcome to Premier Power Solutions, LLC's, bi-monthly newsletter, designed to provide an overview and awareness to our customers of recent and relevant information and issues regarding competitive energy markets, regulatory and legislative matters, and customer choice options.
"Our customers benefit from our experience and the resources we provide for controlling their energy spend coupled with a customized and localized one-on-one approach."
SERVICE HIGHLIGHT OF THE MONTH
Energy Audit Services
Through our Premier Energy Audit Service, we can provide you with the detailed information that you need to take action in reducing the amount of energy your business consumes. Our Premier Energy Audit takes you through the following basic steps:
1) Assessment of the current situation - How and when do you use your energy?
2) Determination of the major areas where improvements can be made - What are the major areas of energy usage that we can impact through positive action?
3) Recommendations on how to implement the identified opportunities - What specific actions can you take to reduce the amount of energy that you use? We offer this service on a fee basis. We charge an hourly fee to have one of our energy experts spend time at your place of business to compile the necessary information to be able to complete an audit report for you. Typically, the total fee for the audit equals between 1 and 3 percent of your annual spend for energy.
To talk to a Premier Power Representative about this program click here to send us your contact information or call us at 724-458-5600.
Duquesne Light Utility (DQE) Service Territory Customers in PA will See Changes Affecting Bills Beginning in May and July 2014. These Changes Affect all DQE Customers.
- Distribution Rate Increase - On May 1, 2014, customers in DQE service territory in Pennsylvania are expected to see an 11% distribution rate hike, possibly impacting residential customers with a 6.5% increase if the deal is approved. Small, medium and large business customers will also see slightly smaller increases.
- Preparation For Advanced Meter Functionality - Account Number Change
DQE customers can also expect to see their utility bill account number or
Supplier Agreement ID Number (SA ID) to change from 13 digits to 10 digits,
as well as some other conversion changes expected to occur in July 2014.
- Energy Efficiency Charge Increase - An increase to this charge is expected in May 2014 for all rate classes.
Increase in Cost Component Included in Customers Both Under Contract and Under Utility Default Service in PJM
Regardless of who you contract with for your electricity (alternative supplier or utility default service), you are bound to see your pricing, contracting, and consumption of electricity affected due to a specific cost component referred to as capacity. All PJM Interconnection customers (OH, PA, MD, etc.) receiving electricity supply pay this charge in addition to the raw price of energy. Capacity costs are necessary to ensure sufficient generation when the demand on our grid is at its peak. The costs vary from year to year as indicated in the charts below.
In the past, these charges may have been easy to discount as they were relatively small, at maybe a fraction of a penny per kWh. However, on June 1, 2014 charges will increase significantly from 2013. In June 2015, we will see an even larger increase from current levels. These costs will soon become the second largest expense making up many customers electric bills.
As a result of aggressive Environmental Protection Agency (EPA) regulations, coal-fired power plants in Northern Ohio and Northwestern Pennsylvania are being deactivated (or taken off-line). This puts a constraint on the PJM grid. Higher capacity prices work as a market incentive to encourage energy and transmission providers to build facilities to address these constraints.
In the meantime, your billed capacity costs are based on factors such as how your usage coincides with PJM's peaks at the end of each summer, and your individual load factor (electric consumption consistency).
We can help you understand how these changes in capacity will affect your business and assist you in lowering your exposure and mitigating the impact of these escalating costs.
NATURAL GAS HEADLINES
Natural Gas Storage Continues to Impact Future Pricing
Natural gas storage volumes are causing prices to remain high as we move into spring. Historically, we would begin seeing prices drop at this time of year, but with the record cold this winter, storage has taken a major hit. As storage begins to fill back up through the spring and summer, we should see some relief in natural gas pricing. The graph below shows where storage stands versus the five year minimum and maximum volumes.
Click the link below for an article from The Post Gazette on storage volumes.
FIRSTENERGY SOLUTIONS IS BEING CHALLENGED ON THE APPROPRIATENESS OF PASS-THROUGH CHARGES
By: Lee McCracken, President, Premier Power Solutions
FirstEnergy Solutions, LLC (FES) has recently decided to pass-through charges that it incurred as a supplier in the PJM Market that were related to the cold weather we experienced in January. FES states that their contract language allows for this pass-through of costs, even in the case of customers with fixed price contracts.
As we told you some time ago, Premier Power has retained legal counsel to review the contract language in your contract to determine, from a legal standpoint, whether or not these charges can be passed through to you. We don't have the legal opinion back yet, but we do expect it within the next couple of weeks. We will continue to keep you informed as this situation develops.
There have been several other challenges to the pass-through of these charges by FES. First, the Public Utilities Commission of Ohio has opened an investigation into this matter to determine if it is appropriate for these charges to be passed through. They are requesting comments from energy market participants on this matter. Secondly, PA Public Utilities Chairman, Robert F. Powelson issued a statement questioning the charges. And most recently, the Utility Workers Union of America has questioned the charges and has asked the PA Public Utilities Commission for a declaratory order barring FES from passing through these charges.
It appears that there are many market participants who believe that the pass-through of these charges may be inappropriate. All of the above actions are in the very early stages. We will keep you posted on further developments with respect to this important issue. As always, if you have any questions, please feel free to contact me or your Premier Power Representative.
BROKER & CONSULTING SERVICES
What We Offer
Established in 2005, Premier Power Solutions, LLC, is one of the nation's 15 largest energy brokerage and consulting firms, saving its customers as much money as possible on their energy costs. We advise large corporations as well as operators of single locations on trends affecting the energy markets and assist them in minimizing the level and volatility of their energy expenditures, in addition to helping them meet their sustainability goals. Our footprint covers the PA, MD and OH territories.