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Summer 2014  Issue 15

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  


A lull and then watch out!   This past winter showed us the impact of scarce natural gas pipeline constraints on power prices. The period January through March 2014 was 15% colder than the same period in 2013 and as a result  delivered natural gas prices (commodity and transportation) were higher by  roughly 30%. Wholesale energy prices  averaged 78% higher!  What is just as interesting is what happened when the winter ended. From April forward New England wholesale prices have been only slightly higher than last year and in May, 9% lower.  Once the pipeline scarcity caused by cold weather ended, the glut of natural gas commodity pushed prices lower.   This peculiar situation will impact New England in two ways, first the high winter prices in 2014 will be reflected in higher forward prices.  In July 2013 a CL&P Rate 30 customer could have signed a 12 month contract for roughly 8.2 cents/KWh, today a twelve month term would cost 11.5 cents/KWh, a 29% increase from one year ago.  For suppliers that had to go to market to buy additional supply on the wholesale market this past winter, you can bet that they will not let that happen again and as a result additional hedges are built into the prices being offered today as security. 


The second impact is the result of the fall off in wholesale power prices that occurs when there is no weather demand. With the exception of July and August, the non-winter months are very likely to remain at or below last year because in these months natural gas transportation is in excess. This pattern of 5 months of higher prices and 7 months of low or lower prices causes generators using non-natural gas fuels to struggle to make money. The short period of time non-natural gas generators have to make money has caused 3,400 MW of power generating plant retirements  (for a quick review on this topic see the Spring 2014 issue).   In the end New England become that much more dependent on natural gas. 


ISO NE Connecticut Zone Average Day Ahead Prices 


 Month2014 2013  DifferencePercent Diff
 January $166.43 $85.71 $80.72 94%
 February $153.89 $115.40 $38.5033% 
 March $109.22 $52.69 $56.53 107%
 April  $44.88 $43.30 $1.58 4%
 May $37.26 $40.83 -$3.57 -9%
 June $38.12 $37.32 $0.79 2%



Looking Ahead  


Relief for New England will occur when the interstate natural gas pipeline system is expanded. The two major expansions, the Algonquin AIM project and the Tennessee expansion are still being projected to be completed by November 2016 and November 2017 respectively. This past winter Spectra Energy, the owner of the Algonquin pipeline, announced the Atlantic Bridge expansion to Boston and to the Maritime Providences of Canada. The Atlantic Bridge is expected to be November 2017. The Algonquin AIM project is well on its way and should be operational by November 2016. Whether the Tennessee and the Atlantic Bridge project both get completed or are completed by November 2017 is speculative since both projects have yet to break ground.  Adding an additional question mark to the Tennessee expansion is that eenvironmental and generator opposition has sprung up in Massachusetts.  



Natural Gas Storage:


The natural gas commodity as of mid June was approximately $1.00/MMBtu higher than at this time last year.  The primary cause is the impact of the recent cold winter on the amount of natural gas in storage.  As of the week ending June 27th, the amount of natural gas in storage was 666 Bcf less than last year at this time and 790 Bcf less than the five year average. Recent weeks have shown that production is beginning to eat into the deficit, but to inject enough natural gas to create sufficient reserves for winter supply (roughly 3,200-3,800 Bcf)  will mean injections will have to average between 71 Bcf to 104 Bcf for the remaining 18 weeks of the injection season. A hot summer or an early heating season could eat into the amount of natural gas injected, so injections less than 100 Bcf will be viewed negatively by the market.  




For those that are looking to put an agreement into place in the very near term it is worthwhile to keep an eye on the 10 day weather forecast.  When the heat breaks, prices tend to soften as confidence builds for that week's natural gas injection number. 



Overall Outlook and Wildcards:


Looking ahead the trend to focus on through the Fall will be how quickly the natural gas storage deficit is offset. If the deficit is offset natural gas and power prices will moderate. Still over the near term horizon, there will be no additional natural gas pipeline capacity coming so any moderation of prices will be slight.  Any extended heat wave this summer will impact the final level of natural gas injected into storage.   


Procurement  strategies for the next quarter:
  • The best time to fix a price during the next six months will be during the late summer and early and fall.  The closer to the winter that a price is requested the more likely the price will reflect supplier anxiety of a repeat of last year. 
  • The termination date of any new agreement will be important in determining the final price, try to get a contract that includes as many non-winter months as possible. 
  • 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.  
  • 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.
For more information on the proposed Tennessee Natural Gas Pipeline Expansion.
  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
CL&P's New Rates
Other News


CL&P's New Standard Service rates



CL&P's new Generation Service Charges went into effect on July 1 and will expire on December 31st of this year. Somewhat surprisingly the prices were higher since the new rate period does not include January or February, the two most expensive months. For a CL&P Rate 30 customer the new rate is 9.917 cents/KWh, or roughly a 10% increase.     CL&P's next rate period will be for the months, January 1 - June 30, 2015. 
Reviewing supplier offerings for a 12 month term starting in July it is not uncommon to see offers in the 11 -12 cents/KWh range. With that in mind it would not be surprising if the next CL&P Generation Service Charge was in the  11 to 12 cents/KWh range.
        CL&P Generation Service        Charges 
 July 1 - December 31, 2014
 Rate           Price           % Increase
 1   Res         9.990                8.2%
 30 Sm Com  9.917               9.9%
 35 Sm  Ind    9.917               9.9%



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Other News


The EPA has been at the center of a lot of activity this past year as regulations on cross-state emissions have been validated and carbon reduction targets have been proposed. In addition Federal Energy Regulatory Commission is meeting with opposition on some of its key orders. 


Cross State Pollution


The Supreme Court overturned a lower court ruling that would have prevented the EPA from extending its authority to regulate the emissions  of upwind states that pollute downwind states. This is good news for New England which has been forced to absorb emissions from western states and put into effect measures to reduce the impact of cross state pollution on its own citizens.  Overall the ruling helps to level the playing field for New England based business and reduce subsidies of western manufacturers and power plants. 


New Carbon Goals


In June, the EPA  proposed reducing carbon emissions by 30% from 2012 levels by 2030. The largest targets for carbon reduction are power plants. Inexpensive natural gas (in most months) will force three New England  coal plants to retire which will give New England a big head start on this goal.  The plants scheduled to retire are, Brayton Point in Rhode Island, Salem Harbor in Massachusetts and. Bridgeport Harbor in Connecticut. In addition the New England states participate in the Regional Greenhouse Gas Initiative (RGGI). To date RGGI has reduced northeast carbon levels by 45% from 2005 levels. RGGI uses a carbon trading system that auctions off limited carbon emitting rights. 


FERC Order 745 Overturned  


A Federal Appeals Court threw out the Federal Energy Regulatory Commission's (FERC) Order 745. Order 745 dealt with payments to providers of demand response. In its ruling the court maintained that FERC's Order 745 conflicted the ability of states to set and regulate retail prices. 


This ruling has created a great deal of tumult as the ISO's will no longer be able to rely on demand response as a asset to reduce energy consumption at the time of highest need. It is interesting that neither the ISO's or the states are happy with this ruling and are seeking to have it reversed.


It will take some time to sort out the impact of the overturn of Order 745 but it is expected new protocols will be required to make demand response an effective resource again. 





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