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Winter 2013 - 2014  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  


Wow what a difference some cold weather can make! While the rest of the world experienced the warmest November on record, Connecticut was 15% colder than the five year average. Through the middle of December the picture has not improved with a number of days when the high temperature only made it into the 20's. In this newsletter we have been focused on New England's tight natural gas pipeline capacity and the cold weather has exacerbated matters. The price for natural gas transportation on the Algonquin pipeline for the Winter of 2013-2014 has doubled since the Fall. In fact, the price for delivery on the Algonquin Pipeline for the months of January and February is now 3 times the cost of the commodity itself! 


So this cold start to the winter means that the greatest influence on power and natural gas prices over the next quarter is going to come from  the weather, the rate at which natural gas storage is drawn down and price of natural gas transportation.  


The Weather


If you don't mind being wrong nearly all the time then long term weather forecasting might be the line of work for you. It is difficult to provide market direction when the determinant is so random.  The 10 - 15 day outlooks provided by  the Weather Channel (see website as well as others at least provide some near term guidance. 



Natural Gas Storage 


The natural gas injection season ended on November 15th and since that date natural gas has been pulled from storage to meet the demands of heating customers and power generators.  That in itself is as expected, it is the rate that natural gas is being pulled that will matter most. To date the withdrawals have been nearly double that of last year and the five year average as heating demand has been stronger than last year. Whether this weather dependent trend will continue (see my comments on long range weather predictions) is anyone's guess.   The outlook for now for pressure to remain on forward prices as the quantity of gas required to replenish storage for the next heating season will increase natural gas demand through the summer. 



Natural Gas Transportation 


As mentioned at the top of this piece, the price of natural gas transportation has doubled since the Fall. Markets have memory so when warmer weather returns the expectation is that prices will not return to the levels we saw this past summer. In fact New England can not expect price relief until the interstate natural gas pipeline capacity is expanded.  These expansions are planned to be operational by 2016.  To observe the trend in the cost of natural gas transportation on the Algonquin Pipeline, see Graph B below.  



Overall Outlook and Wildcards:


The outlook now is for power prices to rise to accommodate the true scarcity value of natural gas transportation. So price quotes in the $.07/KWh and $.08/KWh range are not likely to be revisited until after 2016.  It more likely that the range of power prices will run between $.095 and $.105/KWh.  Prices could certainly run up to $.11/KWh if the winter continues to drain natural gas storage and the interstate natural gas pipelines become even more constrained.  


The road to the downside....warmer than normal weather! While warmer than normal weather may seem impossible as we are shoveling and bundling up, in the past it has not been unusual to have a colder than normal month followed by a warmer than normal month. 



Possible strategies include:
  • A trend of higher energy prices is revealing itself. If the winter remains cold think about getting ahead of the trend by fixing your next contract price during the next shoulder season (March-June or September - October).        
  • New natural gas pipeline capacity will not be added until 2016 at the earliest. Your energy plans should at least take you to 2016. As things stand today any price around  9.5 cents/KWh should be considered a good price.
  • 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.
To understand how these strategies apply to your business call Howell Energy Consulting to create a procurement plan for your organization.

  Graph A 



Graph B







About Derek Howell 

With over 30 years in the energy industry and 14 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 the New England and New York regions. 


In This Issue
Energy Price Outlook
Winter Reliability
CL&P's New Rates


ISO New England's Winter 
Reliability Program  



In the Fall 2013 issue of this newsletter ISO New England's Winter Reliability  Program was discussed. The Federal Energy Commission (FERC) gave final approval to the program in September of this year but with a twist.  Instead of collecting the cost of the program through distribution rates the cost will be imposed on the generation service portion of the bill.
Suppliers have interpreted this charge as a change in regulation. Direct Energy and Liberty have already announced their intention to pass through this cost to customers and the other suppliers are likely to follow their example. 
Who will be charged? 
Not all customers will receive a pass through charge. Any customer that has recently executed a contract (at least as recently as November) should be  covered since the suppliers were aware of the Winter Reliability Program.  Customers that executed contracts prior to November though may want to first review their contract to determine if the supplier has the right to pass through the new charge. If there is any doubt the customer should contact the supplier. If any readers would like Howell Energy Consulting to review their contract and provide an estimate of the charge please call or contact Howell Energy Consulting using the contact information shown above. 
How much will charge be?  
If you believe your firm may likely to be billed charges from your supplier you can estimate the potential cost. ISO New England intends for the charges only to affect power supplied from December 1, 2013 through February 28, 2014.  The charges are anticipated to run between $.002/KWh - $.004/KWh. To estimate your firms exposure simply use the lower and upper ranges and multiply them by the KWh volume pulled from your December 2012, January 2013, and February 2013 CL&P bills. As an example if you were billed by CL&P in December 2012 for 123,500 KWh the potential cost to you of the program would be somewhere between $247 and $494. Continue the above for the months of January and February and then sum.  


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CL&P Announces New Rates 


On December 10th the Connecticut Public Utilities Regulatory Authority (PURA) gave final approval to CL&P's new Standard Service Rates. These new rates will go into effect on January 1, 2014 and will end on June 30, 2014.  Listed below are a sample of some of the rates and the percent increase from the current rate.



Rate      New Price         Pct Chg


Res            9.235             +  21.9%

Rate 30       9.016             + 16.1%

Str Lgt        9.006              + 26.6% 


While these new rates are between 1.25 and 1.9 cents/KWh higher, the market rates at this time are at least another 1.0 cents/KWh above that. So if you do not currently have a contract with a third party supplier, this is a good time to take shelter on the utility rate and begin looking at third party contracts that begin in March with terms ending in 2016.


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