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Winter 2013 Issue 11 

Welcome to Howell Energy Consulting  

Howell Energy Consulting brings you the opportunity to focus on the core mission of your business, while allowing an energy professional to create competition for your electricity and natural gas requirements through managed procurement.

Howell Energy Consulting is a licensed energy professional in Connecticut and Massachusetts. For more information :

phone: 860-205-3863
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Energy Price Outlook  



Well New England had a bit of a scare at the end of November when the transportation cost of natural gas spiked. While the natural gas commodity cost rose roughly 23%, from $3.00/MMBtu at the end of this past summer to the $3.30 - $3.70/MMBtu range early this winter,   the transportation of the natural gas for the Winter of 2012-2013 increased nearly 70% from roughly $1.58/MMBtu to $2.67/MMBtu. (See the side Article "Basis").  The reason for this spike is the large increase in power generation fueled by natural gas. Since 1997 the EIA reports that New England natural gas generation has increased by 144%!  


So while the demand for natural gas as increased the means to bring natural gas to our local market area has not. The Algonquin Pipeline one of two major interstate pipelines (the other is the Tennessee) that transports natural gas to southern New England typically only operates at capacity levels of 70% or more only in the coldest months. In 2012 the Algonquin pipeline was at 80% capacity nearly the entire year.


Consider how warm it was last year and yet the pipeline operated at 80% capacity. Projections released this past November for 2013 called for New England to experience a normal winter and it became clear to the market that a really cold day could create constraints in the pipeline and as a result the cost of the  transportation of natural gas popped.


The outlook for New England pipeline capacity for the next couple of years remains tight. Spectra Energy announced this past spring a plan to expand capacity on the Algonquin pipeline but the impact may not be felt until the winter of 2016-2017. For the next three year cycle the transportation of natural gas will play as critical a role in energy prices as the cost of the commodity.



Keep an Eye on the Weather


If constraints on the natural gas pipeline are a significant key to power and natural gas prices, the weather is the factor that will exacerbate any price trends. There is snow on the ground and it is cold outside as I write this but who knows how the weather will end up this winter.  Trending weather in one direction or the other will have an impact on current year prices and will be reflected future prices.



Outlook and Buying Strategies
Natural gas commodity prices have traded within the $3.30 - $3.70 MMBtu range since this past fall and the expectation is that without colder than normal weather this range should hold.  Natural gas transportation will remain constrained through 2016 which  without rapid economic growth or unseasonable temperatures should hold prices near the levels that we now see. Howell Energy Consulting still considers the underlying trends such as economic growth and slow growth in supply putting upward pressure on prices but much of this trend is already reflected in price quotes you may have seen over the last couple of months. The change in Connecticut Generation Service rates to a shorter term price means that Connecticut customers now have a better chance to get out ahead of market trends.
Possible strategies include:

  • If you are in the market today, the weather will have the largest impact on when to buy. A warm/cold week could swing power prices $.002 to $.005/KWh lower/higher.  
  • Anticipate that the underlying trends will be reflected in forthcoming generation charge resets. You may want to leapfrog the next reset by buying now at a price close to the current Generation Service Charge if you anticipate that prices are trending higher. 
  • If you are comparing a monthly price to a term price  note that as the monthly price increases so will the  term price.  The $.07/KWh  utility one month price  looks  pretty good when compared to  a supplier's $.08/KWh twelve month offer but when  the single  month utility  price does increase to  $.08/KWh the  twelve month marketer price may be  over $.085/KWh! 


To understand how these strategies apply to your business call Howell Energy Consulting to create a procurement plan for your organization.
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About Derek Howell 

With over 30 years in the energy industry and 13 years of experience in the deregulated energy business, Derek Howell's expertise covers the broad expanse of the electricity and natural gas markets.  


Prior to the founding of Howell Energy Consulting. Mr. Howell  was Direct Energy's Director of Retail Pricing for  New England and New York regions. 


In This Issue
Energy Price Outlook
CL&P's New Rates
Reversing Trends

CL&P 2013 Small Commercial Generation Service Rates


On January 1, 2013 CL&P's new Generation Service Rates (GSR) took effect. While the GSR rates show a significant drop from 2012, the GSR prices will now be reset twice a year rather than only in January. So the typical apples to apples comparison of supplier's prices to GSR no longer exists since suppliers prices are typically for increments of twelve months. If you are managing small commercial accounts Rate 30 and Rate 56 (less that 500 KW) it is now more important than ever to review market   fundamentals to get ahead of the next CL&P reset.  Look below for a peek at the new CL&P small commercial rates:

 CL&P   GSR       %Chg from               $/KWh             2012

 30/35   $.0781         -10.5%  

 55/56   (Lt 500 KW)

On PK     $.0979         -9.4%

Off Pk      $.0679         -13,1%

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Reversing trends


As has been discussed in other issues of the newsletter, the natural gas rotary rig count that is published by Baker Hughes, is a key indicator of supply. The greater the number of rigs drilling for natural gas the greater the natural gas supply. Since September 2011 the natural gas rig count has steadily declined as a reaction to falling natural gas prices. Starting this past October natural gas prices have been showing gains moving from the $3.00/MMBtu range this past summer to the $3.70/MMBtu range early this winter. These stronger prices seem to have stopped the decline in the number of rigs and in fact possibly reversed the trend. As natural gas prices have risen the natural gas rig count has stopped falling and has increased slightly. If the natural gas industry is able to maintain this balance the price of natural gas should stabilize. 


Howell Energy Consulting is monitoring this dynamic to help you plan forward.


Typically when speaking of natural gas prices the focus is on the price of the commodity. The New York Mercantile Exchange (NYMEX) shows prices for natural gas delivered to a specific location. The point chosen is a compressor station in Louisiana called the Henry Hub. 
Suppliers though need to move this gas from the Henry Hub to the market delivery areas and the cost of this transportation is called basis. New England happens to be at the end of pipelines that are getting increasingly constrained as more and more power generation is fueled by natural gas. In November the cost of the basis spiked and power prices along with it. The spike in the basis caused power prices to rise nearly $.01/KWh.  

Help is coming but it will not be soon. Spectra Energy announced this past spring a proposal to expand the Algonquin natural gas pipeline that serves Southern New England. Of course these projects take time and the earliest in service date would not be until the Winter of 2016-2017.  

To learn more about Howell Energy Consulting Go to:
Derek Howell
Howell EnergyConsulting LLC