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Summer 2013 Issue 13

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
web site:


Energy Price Outlook  



Well as suggested last quarter natural gas storage guided prices.  In fact the large natural gas storage deficit relative to 2012 at the end of April created concerns about gas supply for next winter that pushed the one year power price for small commercial customers to nearly  $.09/KWh. That is from the low established in April 2012 of $.067/KWh, an increase of over 33%! Recently the news about natural gas storage has improved and as a result power prices have fallen slightly. Since April 12th  injections to natural gas storage have been 1,014 Bcf, compared to the five year average of 970 Bcf. In 2012 because of the warm winter and the resulting large surplus injections were only 653 Bcf.  Even with these relatively large injections, 2013 natural gas storage remains in deficit to 2012 by 443 Bcf.  The comparison to the five year average though shows that the deficit has nearly been erased. Take a look at the graphic below and it is apparent that the surplus that we experienced at the start of the past winter is not likely to be repeated. 


Okay so what lies ahead? This is when I say, "That depends". Certainly natural gas storage is a key to the outlook but what is the key to storage?  For the next quarter the driver will be the weather. As the hot weather builds more natural gas electric generation will come into play. In the past generation from coal would fill in the gaps during the summer but inexpensive natural gas prices and the onset of environmental regulations have sped up the retirement of coal plants and increased the use of natural gas. All of which is to say the hotter the weather the less natural gas will be injected into storage. In fact over the past three weeks as new 14 day weather outlooks have been announced, power prices have fluctuated roughly $.003 higher and lower depending on whether the outlook has called for hotter than normal or colder than normal weather.



Natural Gas Transportation 


Constraints to the New England natural gas pipeline have not eased over the last quarter and are not expected to ease until 2016.  Constraints create volatility and most buyers may want to avoid variable or market based products unless the product is being managed. The constraints also mean that occasional opportunities are created.  Over the last month the cost of natural gas transportation slipped slightly which along with the improved news on natural gas storage has allowed power prices to drop. 


CL&P Basic Service Reset:


On July 1st CL&P's basic service rates were reset from $.0781 to $.0776 a drop of only 0.5%.  This was a surprisingly small decrease and one that indicates the direction of future resets. With such a small decrease in Basic Service Rates and with a power market that has gained over the past year it is very likely that the next CL&P reset will be higher.  It may be time to consider getting ahead of this new direction. 



Possible strategies include:

  • There are opportunities being created by the impact of weather on storage. For a one year term fixed price consider anything under $.08/KWh a buy. Howell Energy Consulting can help you set up these targets with multiple suppliers to take advantage of the changing outlook on the forward expectations of suppliers.  
  • If you are concerned that the market is trending higher you may want to leapfrog the next CL&P and UI reset by buying now at a price close to the current Generation Service Charge.
  • If you have room in your budget and you are concerned about the upcoming year consider a blend and extend of your current price. Not all suppliers allow this but it may be worth asking about. You will pay more now but the your price for next year will not increase as much if you had waited for the current contract to expire.
  • All plans though should be made to get your organization to 2016 when additional interstate pipeline capacity is expected to become operational.
To understand how these strategies apply to your business call Howell Energy Consulting to create a procurement plan for your organization.

   July Nymex




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
Auction of Basic Service
Potential Rate Change

The Auction for Basic Service Customers


An auction of the right to serve Basic Service customers was proposed as part of Governor Malloy's energy program during the most recent budget. Under this plan, suppliers would pay a fee to the state for the right to serve a block of Basic Service customers. Questions about whether customers that were part of the auction could opt out without penalty to sign an individual contract as well as a number of other operational details eventually prevented the concept from moving forward. In general large third party suppliers were in favor of the auction. A single bid to serve a large number of customers is more efficient than the thousands of  dollars spent on flyers and telemarketers.
The auction proposal though is is not dead yet. The National Energy Marketers Association will be meeting in Hartford this September and the auction will be on the agenda. 
The difference from Basic Service for customers is that individuals will be enrolled as a customer of a supplier for a term. At the end of the term  customers will be made  a new offer by the supplier or potentially rolled over to a variable product. This of course was one of the operational details that was not fully worked out by the budget deadline.


In the end there were too many issues left open that could expose customers to abuse and the proposal was pushed off. 


It will be interesting to see what the fall will bring.


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Potential Rate Change 


During the winter of 2012-2013 there were  a few days in December and January when delivered natural gas prices rose from $9/Dth to over $30/Dth. Constraints on the natural gas pipeline were to blame for the increase. Significant price impacts aside, the high demand for delivered natural gas meant that some natural gas fired electric generating plants could not get enough natural gas to run their generation and deliver to the market. ISO NE the regional authority in charge of power reliability can not afford for generators to not perform when called upon and has proposed a fine in these instances. Without question consumers will ultimately pay these costs. For the winter 2013-2014 the costs will show up as a charge on the distribution bill. For the winter 2014-2015 and beyond the charge is proposed to be applied to the generation  side of the bill.


While the charges may never need to be passed through, look to your contract clause that deals a change to the wholesale market to understand if a charge like this could be passed through to your organization.


If you would like Howell Energy Consulting to perform this review for you please contact me at or via phone at 860-205-3863.



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