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Spring 2014  Issue 14

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. For more information :

phone: 860-205-3863
web site:


Energy Price Outlook  


Incredible !  Here we are at the middle of March and the cold weather seems like it will never leave. January and February were 7% and 9% colder than normal respectively and the winter excluding March has been 8% colder than normal overall.  Not only has it been cold in New England but it has been cold all along the Eastern seaboard and all through the Midwest.  There isn't much good news on the horizon as The Weather Channel anticipates colder than normal weather will continue through the Spring. 


Higher demand for heating across much of the nation has led to higher natural gas and natural gas transportation costs. Add to this an extremely strained New England natural gas capacity pipeline system and this is a recipe for extreme prices. On March 5th the cost of delivered natural gas was nearly $30/Dth, nearly four times the normal cost!   The impact of these high natural gas prices has flowed through to the Power Market. Spot power prices in New England since the start of the year have been nearly twice as high as prices last year.  


Looking Ahead 


Even though the run up in winter prices one year ago was significantly lower than this past winter, the market's memory of the run up was priced into this year. Now with an even higher run up this past winter, power prices for next year will be that much higher. A twelve month power price for a small commercial customer is now $.02/KWh higher than it was at this time last year. This increase represents a 25% jump! Even if next winter returns to normal weather it is not anticipated that this increase will be offset until the new New England natural gas pipeline capacity becomes operational in the fall of 2016. 


Pressure on natural gas and power prices will continue through next winter as this winter's cold weather has also depleted natural gas storage. At this time last year natural gas storage was running a 269 Bcf surplus relative to the 5 year average. In 2014...a 958 Bcf deficit (See Graph B).  Prices will have to remain high enough for natural gas producers to supply summer generation demand and  re-fill natural gas storage before next winter. 


So the largest factor for the upcoming months will be natural gas production. If natural gas storage is filled at a faster pace than expected there will be some easing of prices but not to much should be expected.



Overall Outlook and Wildcards:


Looking ahead the trend to focus on through the Spring will be how quickly the natural gas storage deficit is offset. A quick refill to storage will be indicative of higher natural gas production.  That said with no improvement in New England natural gas pipeline capacity in sight until at least the fall of 2016 customers can expect to see elevated prices.


Procurement  strategies for the next quarter:
  • The best time to fix a price during the next six months will be during the spring and fall. Another opportunity may occur if natural gas storage is being filled at a faster rate than expected. 
  • The termination date of any new agreement will be important in determining the final price, try to get a contract that ends either in the fall or the spring.
  • New natural gas pipeline capacity will not be added until the fall of 2016 at the earliest. Your energy plans should take you to that time period at least. As things stand today any price below 9.5 cents/KWh for most commercial customers 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 Redux
And then...


ISO New England's Winter 
Reliability Program Redux  



ISO NE's Winter Reliability Program was a proactive approach to head off problems that occurred in the Winter of 2012-2013 when natural gas prices became very expensive and   some natural gas fired generators could not fulfill commitments to produce power. To counter this issue during the Winter of 2013-2014, ISO NE made reserve payments to some dual fueled generators to keep enough fuel on site to fill the gap should natural gas generators fail to meet generation commitments. With a winter that has been over 8% colder than normal, there have been many expensive natural gas days and two periods when the Winter Reliability Program was called upon to fill in some gaps. The first was the week of January 21-25th, 2014 and the second was the Friday and Saturday of February 8-9th,  2014. 
ISO NE had initially planned to use the Winter Reliability plan for the Winter of 2013-2014. In January 2014 ISO NE filed its plan on how future winters might be served. At the same time the New England generators filed a competing plan. Without getting into the details of the competing plans, if there is no resolution by the end of the summer, ISO NE may rely once again on the Winter Reliability Program. Bottom line for consumers, if in fact the Winter Reliability Program is put in place for next winter there will be another round of supplier pass through charges.


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And then.....


On February 5th, ISO NE announced the results for the capacity auction for June 2017 through May 2018. Before going any further lets discuss what capacity is and why ISO NE holds an auction. 


What is Capacity? 


Capacity is the power product that assures that there are enough power plants available to keep the lights on. The product was created to provide generators an income stream even when they do not produce power.  


The Auction 


To make sure that there is just enough and not excess generation, ISO NE holds a reverse auction. Essentially ISO NE begins with a high price and round by round lowers that price until there is just enough generation to serve the market. To allow time for new generation to become active the auction held this year is for service to be provided three years from now. 


Typically capacity has contributed less $.01/KWh to your price of electricity but recently there have been a number of announcements about power plant closings which over the next five years will reduce New England capacity by 3,400 MW or roughly 11%. A partial list is shown below below:


  • Salem Harbor  
  • Norwalk Harbor
  • Brayton Point
  • Vermont Yankee

The Impact  


Okay so now back to the results. For Connecticut, ISO NE announced a price of $7.05/KW Month for the period June 2017 through May 2018. This is a 156% increase over $2.74/KW Month cost for the year June 2016 - May 2017.  The impact on individual bills is dependent on the way a business consumes energy but a small commercial customer could expect to add another $.0125/KWh to their price of power. For those that are operating around Boston the additional cost will be roughly $.025/KWh!  



If you would like Howell Energy Consulting to discuss how the change in capacity costs will affect your energy procurement plans 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