Newsletter Aug 2015

 

Just  as our demand for cool drinks and comfortable days has increased, so has our demand on electricity these past few weeks of warmer-than-normal summer heat.  The last week of July was the hottest since the third week of July 2013.  This is causing smaller storage injections to continue, as natural gas demand remains high, especially in the power sector. Also, less gas will be available to move into underground storage facilities.

The PJM Interconnection, operator of the nation's largest power grid, that supplies 61 million consumers with power demand each summer, believes they have enough power supply for the demand.  Electricity demand was forecasted to reach about 155,544 megawatts at its peak this summer.  The highest peak use of power in PJM was 165,492 MW in July 2011.  There is currently 177,650 MW of installed generating capacity available to use, which is less than last year, due to power plant retirements. 

The PJM summer period runs from May to September, so there is still time for higher peak hours to occur as we enter August.  Below, you'll see the top 5 preliminary peaks for this summer.  

Your Premier Power Solutions sales representative can provide you with email alerts in advance of potential coincidental peaks.  This load management can help lower your electric costs each year.

The markets continue to be volatile, with some commodity prices rising and others falling.  There still seems to be some confusion a s to which direction prices should go this fall.  We do believe that there will be buying opportunities over the coming weeks and months, and we will continue to help you take advantage of those opportunities as they present themselves.

Thank you for being a Premier Power customer.  We appreciate your business!

President, Lee McCracken & Your Premier Power Solutions Team

 

Electricity Headlines

Henry Hub natural gas prices below $3/MMBtu have led to a shift away from the use of coal and toward natural gas for fueling power generation.  The rapid and unprecedented shift has driven electricity prices sharply lower and inhibited needed investments in plant upgrades and modernization.  Some of these plant upgrades are beginning to show as increased charges on your energy bills.

  • A final decision to increase distribution rates in FirstEnergy Corp's PA subsidiaries was made May 3, 2015.  These subsidiaries are:  Penn Power, West Penn Power, Penelec and Met-Ed. These charges make up 1/3 of your customer bill.  Customers began receiving bills reflecting the new rates beginning May 19, with increases in demand rates and customer service charges.  In some utilities, customers may be transitioning rate codes based on their kWh or kW monthly usage.  Some customers may see a slight decrease, depending on their load factor or average hours of use.  Those moving to a demand based rate from a non-demand rate will have their bills calculated using a kWh/200 formula.
  • Plans to increase distribution rates in PECO and PPL electric utilities have been proposed. The final decisions on these increases are to be made by December 2015 and January 2016, respectively.
  • The PAPUC has set new Act 129 Energy Efficiency & Conservation (EE&C) surcharges, some at increased rates, others at decreased rates, within each utility.  These charges show on your utility bill.  Current EE&C plans are valid through May 31, 2016.  The PAPUC is looking into implementation of a third phase of the program continuing its operation through May 31, 2021.
  • June 1 - August 31 quarterly Price to Compare (PTC) has been set for various utility companies in PA, MD and OH.  As predicted, many of the utility rates for this quarter have increased.  Most utility rates change quarterly, making it very volatile to remain on utility default rates.  Duquesne Light Company (DLC) had decreased utility rates this quarter, but instead of bi-annual tariff updates, two rate classes will now see quarterly rate changes:  GM>25 kW and GMH>25 kW.  Also, single billing capability is expected to be implemented in DLC by the end of May 2016.
  • In early June, the PJM Interconnection received approval of its proposal from the Federal Energy Regulatory Commission (FERC) to add a new capacity performance product to its Reliability Pricing Model (RPM).  This mechanism is utilized by PJM to ensure that adequate capacity is available for each delivery year.  There is a series of auctions that take place and set the price the customer will pay for annual capacity.  The Base Residual Auction (BRA) is the main auction which is conducted three years ahead of the actual delivery year.  The delivery year itself spans from June 1st through the following May 31st.  The "Winter Polar Vortex" period in early 2014 was exacerbated by the poor performance of generating capacity resources, as over 20% of these assets were out of service at a critical time.  In response, PJM proposed to add another layer to the RPM construct with the capacity performance product.  This allows sellers to be compensated at a higher price in exchange for assurances in regard to their performance.  FERC approved PJM's request to delay the BRA for the 2018-2019 delivery, to August 2015.  There will be a series of auctions taking place throughout August and September for the capacity performance product and the BRA for the 2018-2019 delivery year.  Results are expected to be released about a week after each auction.  The end result -- most likely, higher capacity rates for all customers within the PJM footprint.  
  • As early as June 2015, and no later than September, you may see the Network Integration Transmission Service or (NITS) rate fees increase on your bill.  The NITS fees are a major component of transmission costs and have increased across the ATSI zone in PJM that covers Penn Power in Pennsylvania and the FirstEnergy owned Ohio Utilities.  PJM directs the building of new transmission upgrades, and allocates those costs to you on your energy bill.  These upgrades are required for either reliability, economic efficiency, or to meet operational performance criteria.  In Penn Power, this NITS charge is included in the supplier pricing, although some Pennsylvania providers have decided to pass through the NITS charges that are beyond those previously included within your electricity supply rate. It may show up as a specific line item on your electricity bill, while other suppliers may pass the charges through.  In Ohio, they are part of the distribution/regulation portion of your bill.  The charges vary by customer.  Industrial & commercial users can reduce these costs by reducing their peak contribution to load.  Customers without interval metering, which includes most residential, may reduce their charges by less overall energy use.  
  • Ohio's PUC has agreed to delay a public hearing regarding "Power Ohio's Future",  a FirstEnergy Corp. 3-year electric security plan, until August 31.  The plan will involve holding multiple auctions expected to help mitigate volatility for customers, and freeze current base distribution rates to May 31, 2019 for the subsidiaries of Ohio Edison, Cleveland Electric Illuminating and Toledo Edison.  The program is projected to save customers $2 billion over 15 years.  A final order is possible in November or December, but could drift into early 2016.

 

Natural Gas Headlines

NYMEX prices have been trading in a $2.60 to $3.00 window throughout most of the summer.  Although production remains high, we are slightly below the all-time peak production seen last year.  As we move into August, we expect to see a dip in prices late in the month, just as we've seen over the last couple of years.  We should also see a late fall dip in October as we approach the end of injection season.

Injections have been below what we have seen over the last couple of years for corresponding weeks, due to several factors.  The biggest factor has been the increase of natural gas-fired electric generation.  We have seen significant increases in the number of plants switching to natural gas due to the combination of low gas prices and government regulations on coal.  We have, however, fully recovered from the polar vortex of 2014 in terms of natural gas storage, and we are just slightly above the 5 year average for this time of year.  The east region, the largest user, as well as largest storage volume region, is still below the 5-year average and has some catching up to do before the end of the season.

 

Protect Yourself From Scams

Scam artists, impersonating utility company employees, are still targeting customers across the country via door-to-door visits, phone solicitation and electronic communication, convincing them that their power will be cut off if they do not comply.  Customers have lost money, valuables and personal data through these scams.  

Call us or your utility company if you have any concerns regarding solicitations or fraudulent activity.  Switching suppliers, and the termination fees and problems associated with a switch can set you back more than the savings you thought you would incur, if not done properly.   If you are receiving unwanted calls from suppliers, you may contact the PUC to file an informal complaint by calling 1-800-692-7380.

 

Additional Resources

·         Federal Trade Commission*
FTC's Scam Alert website

·         Better Business Bureau Scam-Stopper*
Scam information provided by the Better Business Bureau

·         OnGuardOnline.gov*
Federal government website, managed by the FTC, to help consumers be safe, secure and responsible online

·         FBI*
Scam safety information from the FBI