Energy4Business

6 Ways Manufacturers Can Reduce Industrial Energy Costs

Jess May — Thu, 02 Apr 2015 16:12:30 +0000

How much of the energy you pay for each month is actually used to power your plant? It could be less than half, with the rest escaping through leaky air compressors, inefficient equipment and other energy hogs. Our country wastes more energy than any other nation, including China. In 2013, the United States had an energy efficiency of just 42 percent, meaning 58 percent of all the energy we produce goes to waste. The industrial sector, which includes manufacturing, agriculture, construction and mining, accounts for
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How Do I Prove the Value of Energy Management to My CFO?

Jess May — Mon, 23 Mar 2015 15:59:41 +0000

It’s estimated that the average office building spends about 29 percent of its operating budget on utilities, namely electricity and natural gas. As the facility manager for your company, it is likely that you have thought about which building components consume the most energy, how energy consumption impacts overhead and more importantly, where energy might be wasted. You already recognize that energy costs can be decreased, but convincing executive decision-makers to allocate some of the company’s budget for energy efficient endeavors is no easy task
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Weekly eMarket Update: Week Ending 3/13/2015

Steven Chambers — Tue, 17 Mar 2015 15:21:06 +0000

COMMODITY FUNDAMENTALS

Natural Gas – Bearish

NYMEX prompt month gas futures lost 11.2 cents (3.9%) last week to settle at $2.727/MMBtu as the arrival of spring-like temperatures reduced heating demand across the U.S.
The EIA has reported that 645 Bcf of gas has been withdrawn from storage over the past three weeks. This is the ninth largest three-week total on record, reducing inventories to 1,512 Bcf.
According to the EIA, gas demand for power generation fell by 3.9% last week as temperatures moderated, but lower gas prices have driven a 33.3% gain in gas burns y-o-y.

Crude Oil – Bearish

WTI prompt month crude futures fell below $43.50/bbl to a 6-year intraday low on Monday, Mar 16th as strong oil production and near-record inventories continue to weigh on prices.
OPEC issued a report stating that U.S. oil output could begin to decline by the end of this year, yet U.S. crude production continues to grow despite a 46% decline in rig counts since Oct14.

Economy – Neutral

U.S. retail sales fell by 0.6% m/m in February as harsh weather impacted spending. Negative sales growth over the last three months is likely to drag down estimates for Q1-15 GDP.
The Fed’s Industrial Production index for Feb 2015 shows a decline in the manufacturing component for the third consecutive month (-0.2% m/m).

Weather – Bullish

A mild start to the week will give way to periods of below-normal temperatures over the Northeast and parts of the Midwest through the end of March.
Below-normal temperatures are unlikely to have a significant impact on gas storage inventories as additional heating demand in the Northeast will be offset by variable temperature changes across the Midwest/Midcon and warmth in the western third of the U.S.

WEEKLY NATURAL GAS REPORT

EIA announced a record storage withdrawal of 198 Bcf for the week ending Mar 6th, bringing the average delivery over the past three weeks to 215 Bcf versus a five-year average of only 105 Bcf. Weekly withdrawals above 200 Bcf are considered to be very large, regardless of when they occur during winter. A cumulative three-week withdrawal of 645 Bcf this late into the season highlights the recent impact of increased gas burn in the power generation sector on overall gas demand. Gas storage inventories currently stand at 1,512 Bcf, representing a 51% surplus to year-ago levels, but a 12% deficit to the five-year average. Looking ahead to this week’s storage report, initial estimates call for a withdrawal of around 45 Bcf due to lower heating demand during the week ending Mar 13th.
In its latest Short-Term Energy Outlook, the EIA projects that natural gas production will grow by 5% in 2015 despite a 42% decline in the total number of oil and gas rigs since last October. Dry natural gas output rose by 6.1% last year to a record of 74.3 Bcf/d in December 2014, and as a result, NYMEX prompt month gas prices reached a 32-month low earlier this year. With an abundant supply of natural gas flooding the market, slower production growth will be necessary to sustain a rally in gas prices. As energy prices have fallen, oil and gas rig counts have declined by 41% and 25% year-over-year, respectively. However, falling rig counts have yet to result in reduced gas production due to a current backlog of wells, increases in drilling technology and efficiency, and a shift towards drilling only the most productive wells. If gas production eventually begins to fall as a result of lower rig counts, expect gas prices to increase later this year as the current supply-demand imbalance begins to tighten.

2015 Energy Market Outlook: Prices Near Record Lows

Constellation — Thu, 05 Mar 2015 19:04:41 +0000

Prices for electricity and natural gas are nearing record lows, making this a great time for customers to purchase their power ahead of time. This is due to several factors, including a warmer-than-average weather outlook for spring, a surplus of natural gas supply and a pull-back in power prices. If you missed our recent 2015 Energy Market Outlook webinar, here’s what you need to know. Click HERE to watch a recording of the webinar.

Warmer Weather Is Reducing Demand

For those living in the
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3 Trends Midwest Energy Buyers Should Expect in Spring 2015

Steven Chambers — Thu, 26 Feb 2015 16:54:58 +0000

While the eastern half of the United States is currently enduring the coldest temperatures of the season, there are several reasons energy buyers in the Midwest should be thankful for this winter. Spot gas and index power prices are trending well below year-ago levels, even during a frigid February on pace to be the coldest in over thirty years! And while prices have risen recently due to the blast of arctic cold, many energy buyers successfully insulated their budgets from a repeat of last winter’s
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Natural Gas Options in Michigan: What Detroit Businesses Should Know

Tracie Genaw — Fri, 20 Feb 2015 22:45:20 +0000

It’s clear Michigan business owners want more freedom in choosing who provides them with their energy needs. In fact, 82 percent of Michigan residents said homeowners and businesses should be able to select their electricity provider the way they choose their own mobile phone providers, according to a recent Marketing Resource Group poll. Although the state may still have a long way to go to achieve a full competitive electricity market, business owners do have more options when choosing a natural gas provider
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eMarket Update: Week Ending 2/9/2015

Keith Poli — Wed, 11 Feb 2015 14:28:08 +0000

COMMODITY FUNDAMENTALS

Natural Gas – Bearish

The NYMEX March gas contract extended recent losses to end the week at $2.579/MMBtu, marking the lowest close for prompt month gas futures since June 2012 (32 months).
The EIA reported a smaller than average storage withdrawal of 115 Bcf for the week ending Jan 30^th. Gas storage inventories now stand at a 26% surplus to year-ago levels.
According to Bentek Energy, strong heating demand and record-setting gas burn in the power sector led to the second highest January gas demand levels on record. Gas demand in January 2015 was 6 Bcf/d above the five-year average, but still 4 Bcf/d below a year ago.

Crude Oil – Bearish/ Neutral

WTI prompt month crude oil futures closed the week above the $50/bbl benchmark ($51.69/bbl, +$1.21) with Baker Hughes data showing US oil rig counts at a three-year low.
Crude prices continued to rally on Monday, Feb 9^th as OPEC revised its supply and demand estimates based on lower oil prices and U.S. rig counts that have fallen faster than expected.

Economy – Neutral/Bullish

Over the past three months, job creation has accelerated to its fastest pace since 1997. Payrolls increased by 257k jobs in January while average hourly wages grew by 0.5% m/m.
The ISM Manufacturing Index showed a slowdown in new orders for the second consecutive month amid a weak global economy that may be weighing on the U.S. manufacturing sector.

Weather – Bullish

Very cold air is expected move from the Plains into the East and models show reinforced arctic air will keep the eastern half of the country well below-normal for the next two weeks.
Repeated shots of arctic air stretching from the Rockies into the South and up to the Northeast should boost heating demand levels through the 11-15 day period.
The latest March forecasts predict a cold start to the month, particularly for the Northeast, but normal to above-normal temperatures could move in to the East later in the month.

WEEKLY NATURAL GAS REPORT

The gas storage surplus expanded to 26.3% above year-ago levels last Thursday after the EIA announced a smaller than average withdrawal of 115 Bf for the week ending Jan 30^th. The figure came in below the market’s expectation of a 120 Bcf delivery and was well below the pull of 262 Bcf during the same week a year ago. With inventories now at a surplus to both year-ago levels and to the five-year average, NYMEX gas futures remain under pressure in an oversupplied gas market. Unless forecasts turn much colder through the end of March, storage inventories are on pace to end the winter at or above a 100% surplus compared to last year. Although gas demand from the power sector has increased by 4 Bcf/d as a result of coal-to-gas switching, higher year-on-year production has served to offset the market’s reliance on gas from underground storage.
The increase in shale gas production from the Marcellus region and the subsequent pipeline expansions meant to move gas out of the producing region are changing the dynamics of the gas market. On Jan 29^th, a force majeure event was declared along a segment of the Rockies Express Pipeline (REX) which moves gas from the Rockies producing region into the Midwest. A faulty weld on a section of the pipeline led to a rupture which caused west-to-east flows on REX into IL, IN, and OH to fall from 2.0 Bcf/d to 0.5 Bcf/d. While much of the excess gas from the Rockies found its way into the Southwest along the TransColorado pipeline, east-to-west flows along the bidirectional section of REX increased to 0.3 Bcf/d. This additional flow of gas from the east minimized the need to import gas from Canada or Southeast and kept Midwest spot gas prices contained, even in the midst of overall above average heating demand.

Constellation Project Expected to Save Port Authority $27 Million

Jess May — Thu, 05 Feb 2015 20:24:19 +0000

The Port Authority of New York and New Jersey is taking (another) huge step toward a more sustainable future by engaging with Constellation to install $25.8 million in energy efficiency and water conservation measures.
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Why Chambers and Associations Align With Constellation

Ed Wilson — Thu, 29 Jan 2015 16:57:32 +0000

Is your association looking for ways to attract new members in 2015? Do you want to create a steady stream of revenue without relying solely on dues? Consider working with businesses that can provide integral services to your members! As the VP of Association Channel Sales here at Constellation, my role is focused solely on the development of relationships and acting as a resource for associations’ energy needs. Yes, you may know that Constellation provides a number of energy options for both businesses and residential customers. You may also know that we sell power to more than 100,000 businesses in North America, more than any other competitive electricity supplier. BUT, did you know we have strategic alliances with nearly 40 state and industry associations? Here are 3 benefits of working with us.

1. Referral Rewards

Managing an association budget is always a challenge. Raising member dues is often not a viable option, yet generating enough revenue to meet the organization’s mission still poses a challenge. One solution can be to help members with a key business need while generating association revenue at the same time. Constellation offers rewards to strategic alliances and associations that refer member customers based on the volume of energy they use. We also pay marketing fees in return for endorsements and marketing assistance. This gives our associations and strategic partners another potential stream of non-dues revenue while helping members with one of their major expenses. The good news: As you refer new members, we’ll reward you!

2. Stronger Member Loyalty

In today’s internet driven world, promoting membership for an association is not as easy as it used to be. You need to offer more than a yearly event and a listing on your website to make membership worthwhile—not to mention you want to maintain consistent renewal rates! Associations who work with Constellation have the opportunity to offer their members better access to energy management education, greater contract flexibility and an overall improved customer satisfaction rating; When members see the value of these energy benefits, they’re more likely to stay with your association. We’re committed to educating your members on their options for purchasing energy and using it more efficiently to keep costs in check. Just ask Geoffrey C. Beck, Executive Director of the Massachusetts Municipal Association, who said: “For giving our members the ability to govern their energy budgets, Constellation is a hometown hero!”

3. New Membership Recruitment

If your membership growth has stagnated in recent years, it may be time to think about what you’re really offering new members. Do you have enough incentives? Networking opportunities? Access to educational resources they can’t find anywhere else, such as webinars and forums? Aligning with an energy resource and supplier such as Constellation gives your association greater member benefits and enhanced credibility for new recruits. Members may benefit by receiving competitive pricing and flexible payment options as well as meeting their environmental objectives and having access to regional energy expertise. Constellation has extensive experience addressing the energy needs of Association members. We’ve helped thousands of members gain better control over their energy spends, allowing them to effectively focus on their core business. Whether you’re a national or regional group, a state or industry association or an organization interested in becoming a referrer, it’s easy to work with us. To get started, fill out our application form today and we’ll be in touch soon. We look forward to working with you! Ed Wilson is the Vice President of Association Channel Sales for Constellation. Photo: Constellation’s Annual Association Summit, bringing together Association and Chamber energy leaders from all over the United States to discuss energy management strategies and benefits for their members. Photo provided by Kiati Plooks Photography

Preparing the Northeast for Winter Storm Juno…and Beyond

Ranjan Ezra — Mon, 26 Jan 2015 18:50:14 +0000

Look out Northeast, we’re in for a cold one! In what is being quoted as a “Powerhouse Storm” by experts at weather.com, millions of residents of the Northeast are anticipating 2015’s first blizzard—which is expected to bring over 2 feet of snow by Wednesday. If you remember this time last year, we experienced two Nor’easter’s on 1/2/2014 (Storm "Hercules") and 1/22/2014 (Storm "Janus"). Both storms effected the Northeast by having a negative impact on travel while causing wide-spread power outages. Winter storms are known for bringing heavy winds, snowfall, and creating potential disaster for lots of areas. Overhead power lines are one of many things brought down by winds and snow, which continues to cause power outages for homes and business cost in millions when volatile storms of this magnitude hit residential and commercial areas. Customers that have back up/emergency generation can keep lights on and business running during times such as these as they mitigate some risk from power outages. While we at Constellation expect market volatility and prices to rebound, we believe it is of utmost importance for you as a customer to educate yourself on the latest market trends to keep your energy bill as stable as possible. Let’s get to it, shall we? Earlier this winter, the Northeast experienced a significant drop in commodity pricing as a result of lower-than-expected heating demand. This was due to above-normal temperature patterns persisting through late November and early to mid-December 2014. Fast forward to January of 2015; where we have already seen NYMEX trading at a 26-month low of $3.03/MMbtu. Oil prices fell below $55/barrel, which is having a significant impact on the global economy (think: job loss rates increase and a slowing economic recovery). Happy New Year! Even with mild weather early winter, utility rates for customers in the Northeast have reached an all-time high for several utilities which have published recent default service rates of over $200/MWh. Many of these utilities procured their default supply via auctions held prior to the early winter dip. This has helped to create the potential for savings opportunities for customers in certain utility territories. The Key Takeaway With fundamentals changing over time, there is one thing that is certain: Locking-in energy needs over time rather than one point in time can prove to be beneficial (as it allows for customers to capitalize on expected and unexpected market dips). We saw some impressive swings last year in the energy market—including two dips that occurred last year in the early summer and then again in early winter. Insights from our Portfolio Management team continue to point to the fact that winter is not over, so keep a close eye on those weather maps! Also, let’s not forget that gas pipeline constraints still exist in the Northeast. In New England this issue has been magnified with several retirements that took place recently including Salem Harbor (587 MW) and Vermont Yankee (645 MW). Brayton Point (1,540MW) is slated to retire in 2017 as well as further delays expected for Footprint Power’s 674MW gas-fired facility which is not anticipated until 2017/2018. With the weather volatility and the pipeline constraints, it is important to consider the use of pricing your businesses in these winter months. Using a Market Watch and monitoring “open positions” allows for the perfect solution for the customer who want flexibility surrounding the timing of purchasing energy as well as market insight to help make informed decisions and to take advantage opportunities when the market dips and provides “insurance” against when the market moves up, for instance. Make sure and stay safe this week as Juno makes its way through the Northeast region. To request more information or to talk to one of our Commodities Management Experts, reach out to us today!