The Agreement Details

Neither Con Edison Solutions or Constellation have disclosed any of the agreement or contract’s specific details. However, the deal between the two companies ensures that Constellation will inherit Con Edison Solutions natural gas and retail electricity business. This means that over 560,000 residential, commercial, industrial and public sector customers in areas including the District of Columbia, Texas and 12 additional mid-Atlantic, Midwestern and Northeastern states will transfer over to Constellation Energy.

According to a press release published by Constellation, the company feels that Con Edison is known best for providing customers with products and services of great value. The acquisition will help to maintain those same values while providing customers with additional services and products at great prices. It will also help Constellation to move into markets and develop business within the retail electricity and natural gas industry.

It is important to note that the financial advisor to Con Edison Solutions regarding the contract is UBS investment bank. The agreement is also subject to all reporting and subject requirements under the Hart-Scott-Rodino Act.

Consolidated Edison Company Details

Consolidated Edison (also known as Con Ed, ConEdison or Con Edison) has approximately $36 billion in assets and brings in approximately $13 billion in annual revenue (2010) making it one of the biggest investor owned energy companies in America. They offer a large selection of services and products through its related energy companies including,

Con Edison Company of New York – This company provides steam, natural gas and electricity services to Westchester County and the city of New York.

Con Edison Transmission – This subsidiary invests in gas and electric projects to help give better access to the supply of energy.

Con Edison Solutions – This subsidiary offers energy products and services across the United States. It is the retail component to this company that Constellation has purchased or acquired. The retail business itself comes with about 85 employees, and in 2015, successfully delivered 1Bcf of natural gas and almost 14 Twh of electricity. It is the 16th largest residential electricity retailer and the 13th largest commercial and industrial retailer within the United States.

Con Edison Development – This subsidiary invests in projects that focus on energy infrastructure.

Con Edison Energy – This subsidiary provides electricity risk management and energy capacity services to wholesale customers.

Orange and Rockland Utilities – This subsidiary offers electricity services to 7 counties within northeastern Pennsylvania, New York and northern New Jersey.

Constellation Company Details

Constellation provides products and services for businesses and homes for many states within America. Their services and products include, energy management, renewable energy, electricity or power and natural gas. Their offers include integrated energy solutions to assist their customers in the management, consumption and purchase of energy. Currently, Constellation provides services to around 2 million business, public sector and residential customers. Their customers include many Fortune 100 companies.

Constellation merged with Exelon in 2012. Exelon aims to lead the energy industry in providing clean, reliable, innovative and affordable energy products. Together, they own more than 32,700 mWh of capacity. This makes them one of the United State’s lowest cost and cleanest power generators. In 2015, their combined revenue reached around $34.5 billion. Earlier in 2016, the company merged with Pepco for $6.8 billion. From the merger, Exelon gave Constellation a branch of Pepco called, Pepco Energy Services to manage (a similar subsidiary to Con Edison Solutions).

Community Choice Aggregation

This acquisition means that Constellation will take on a contract called, Community Choice Aggregation. This contract belonged to Con Edison Solutions and will continue to run within its New York territory. Community Choice Aggregation is currently available in 7 states and enables communities to invest in cleaner energy. In fact, Constellation already owns the contract for the territory for the New York State Electric & Gas Corporation.

Community Choice Aggregation also supports energy deregulation. Energy deregulation gives energy consumers the option to choose the company or organization that supplies electricity or natural gas. While not yet available in all states there are many including, New York, Pennsylvania and Texas that are subject to this law. Community Aggregation is one of the ways in which customers are encouraged to investigate their energy supply options, instead of simply sticking with their local utility. In addition, it gives Constellation the flexibility to deepen their commitment to making the supply of energy even more affordable for their customers.

Changes for Customers of Con Edison Solutions

This acquisition, once finalized, will have little impact on current customers. It is estimated that in 2017 (when the acquisition is officially approved), the retail electricity and natural gas supply business will switch over to, and operate under Constellation’s brand. Customers that fall under the umbrella of residential and commercial will not experience any service disruptions and all current or existing contracts will remain unaltered and unchanged.

Con Edison Solutions will continue to provide renewable and sustainable energy products and services for its government, residential, industrial and commercial customers. According to a grid edge analyst with GTM Research, the reason for this is because those specific types of clients require a much more comprehensive understanding of operational requirements and energy consumption for the customers. Competition is much more fierce in this area of the industry. Breaking up their business in this way means that Con Edison Solutions can direct more of their attention towards expanding or growing within this specific niche market. It also means that they can dedicate more time to the development of more energy efficient, sustainable and renewable energy.

The post Constellation Purchases Retail Branch of Con Edison Solutions appeared first on Eisenbach Consulting.

The Railroad Commission of Texas (RRC) — also referred to as the Texas Railroad Commission — is the organization responsible for regulating the oil and gas industry. They also regulate gas utilities, safety in the liquefied petroleum gas industry, surface coal and uranium mining, and general pipeline safety.

As you can probably tell from the description above, the Texas Railroad Commission’s name doesn’t actually reflect its responsibilities or what it actually does for the state of Texas.

On April 29th, the Sunset Advisory Commission of Texas published a report that suggested that the jurisdiction of natural gas utility rate cases should shift from the Railroad Commission of Texas to the Pubic Utility Commission of Texas as all other utility types currently fall under their umbrella of responsibility. Their findings outlined many reasons why this shift (amongst others) should be considered moving forward.

If the motion is followed through, this would mark a significant change on the gas industry and its organizations for the state of Texas.

The Sunset Advisory Commission

This organization is an agency of the Texas Legislature. It is responsible for providing recommendations on the value of other state agencies.

Specific agencies within the state of Texas have a date on which it will be automatically disbanded or terminated. This holds true unless the Sunset Advisory Commission passes specific legislation that allows the agency to remain active. In order to be considered, agencies must provide the Sunset Advisory Commission committee with a self-evaluation report, and the committee will put together its recommendations as well as receive comments from the public. The committee will then hold a final public hearing before the Commission makes its final decision.

The final ruling can include the decision to:

• Allow the agency to continue as is
• Modify the agency’s functions
• Merge two (or more) agencies
• Disband the agency and move its functions to other existing agencies, or terminate its functions

The Texas Railroad Commission Report

Recently, the Sunset Advisory Commission of Texas completed a report on the Texas Railroad Commission. The recommendations provided indicate that the agency will potentially see a huge change in its responsibilities, and name.

Overall, the report outline 7 recommendations:

Recommendation 1: Extend the agency’s expiry date for twelve years using a name that reflects its actual function(s).

Through an examination of current functions, Sunset determined that this specific agency is still required, even though two of its functions should be transferred to other agencies. If the Railroad Commission continues to carry out its functions, than a name change is required to correctly identify and reflect their responsibilities. A suggested name change includes, Texas Energy Resources Commission.

Recommendation 2: Core agency functions should not include contested hearings and gas utility oversight.

This recommendation would have the biggest change on the way Texas currently handles natural gas regulations. Sunset determined that two other agencies, the State Office of Administrative Hearings (SOAH) and the Public Utilities Commission of Texas (PUC) specialize in functions currently performed by the Texas Railroad Commission. In addition, these agencies also have the expertise required to continue to run contested hearings (in the case of SOAH) and deal with gas utility oversight (PUC).

The PUC already regulates every other utility within the state except for gas. The agency itself has years of expertise in ratemaking, implementing an organizational structure and other similar systems for transparency and lower rates. Moving gas utility regulations to PUC ensures that a single agency becomes responsible for all state utilities and their regulations.

Recommendation 3: Improvements needed for monitoring/enforcing public safety and the protection of the environment.

In recent years, the Texas Railroad Commission has had difficulty managing data related to public safety and environmental protection. Sunset examined their current practices and processes, determining that what is currently in place is not yet effective enough. To help the agency improve in this area, they have recommended that for the Oil and Gas division, the Texas Railroad Commission develop a plan to track and measure monitoring and enforcement. They also recommend that the agency come up with a process regarding minor violations and expediting penalties. Another recommendation would require the agency to provide an accurate, annual report of any oil and gas violations. Additional recommendations include,

• Create a policy to file production reports electronically.
• Audit a select group of gas and oil transportation and production reports.
• Define repeat violations and indicate that number accurately online (website).

Recommendation 4: Backlog of abandoned wells

Since 2011, the backlog of gas wells that have been abandoned reached a total of: 9,715. While the Railroad Commission posed questions and comments in their report about funding, Sunset identified a situation with the bonding structure that indicates a problem. There is no risk accounted for regarding well abandonment. This places an unfair share of bond coverage for each well for producers that produce less than 19 wells.

Sunset recommended that the agency make changes to the blanket bond requirements to generate a better balance for all operators.

Recommendation 5: Pipeline infrastructure and public safety

Sunset recommended that the Railroad Commission be authorized to enforce requirements regarding damage prevention on interstate pipelines. This also includes the authorization for the agency to create permit fees for pipelines.

Recommendation 6: Continued attention to contracting procedures

Continued efforts to put policies in place to improve contract procedures will help the Railroad commission to carry out important functions such as state-funded well plugging, information technology improvements and site remediation. Sunset recommends that the Texas Railroad Commission centralizes their contract administration procedures by September 1 of this year.

Recommendation 7: Standard elements of Sunset reviews

Like all state agencies, the Railroad Commission has a governing statute. This statute does not include a standard element in regards to alternative dispute resolution. This element is required in order to help improve rulemaking and resolution processes for other disputes. Sunset also discovered that some Railroad Commission run committees have not met in years, like the Oil and Gas Regulation and Cleanup Fund Advisory Committee.

In order to resolve these issues, Sunset recommended that the Railroad Commission disband the above mentioned committee. They also suggested that they apply suggested changes to their alternative dispute resolution process.

What This Means for Natural Gas in Texas

Should the appropriate governing bodies and entities decide that regulation of gas utilities belong under the PUC’s jurisdiction, this could bring about a huge change to the way that residential customers consume energy. Currently, this group of consumers does not have the option to choose their natural gas supplier. They are restricted to the utilities or utility that provide this service as well as to the rates that the utility charges.

In comparison, the FUC is responsible for regulating electric utilities. In addition, the electricity market in Texas is deregulated. This means that residential customers have the ability to choose the entity, or retail energy provider who supplies their electricity. This approach ensures that customers pay fair rates and receive great service.

What Now? – Moving Forward

Sunset Advisory Commission has indicated that they are working hard to ensure that their recommendations are taken seriously by the Texas Railroad Commission. It is their hope that by doing so, they will not need to review the performance of the agency as frequently.

However, the Texas Alliance of Energy Producers are not convinced that some of the recommendations will benefit the agency or the state. They believe that the report generates several cost and operating issues, especially since the oil and gas industry has recently taken an economic hit.

On the other hand, should the Railroad Commission move forward with the recommended changes, Sunset estimates that the state would see a $4.1 million increase in revenue over five years.

Texas Railroad Commissioner Ryan Sitton has recently stated, “The Sunset staff report and our agency’s response are the beginning of an important process that confident will make this agency more efficient and effective.”

At the moment, the Texas Railroad Commission, who plans to prepare a formal response, is reviewing the report.

The post Texas Natural Gas Regulated by PUCT? appeared first on Eisenbach Consulting.

New El Nino weather patterns may be making a major impact on gas prices, according to new estimates from the U.S. Energy Information Administration. Thanks to an oversupplied gas market and El Nino weather patterns, the EIA is expecting that both the short-term and long-term natural gas prices may be influenced. This means both large commercial clients and industrial customers will be presented with a new attractive buying opportunity.

These forces, along with the market’s current multiyear price low, may potentially put the market on the precipice of an important shift. According to Andy Weissman, the CEO of EBW Analytics, at this important changing point prices can break significantly, “in either direction.”

As for what the EIA suspects in November, some analysts feel as though we could break the record inventory levels set this month, which in tow with unpredictable fall weather patterns, could cause one of two changes in the market. First, there is what experts believe is the most likely option. This is that the oversupply of natural gas, along with the weather changes, will cause the Pacific jet stream to buckle under the influences of the weather and push low pressure systems through the southern and western portions of the country. This will increase the number of days that consumers need heat, therefore increasing the gas demand, with prices increasing anywhere from 15 to 20 cents.

On the other hand, if the Pacific jet stream doesn’t buckle, another situation could unfold. The oversupply of natural gas will be combined with much warmer weather in many of the Southern Tier states. While this scenario is not as likely as the aforementioned situation, it could through off the winter weather balance, resulting in a mild winter season, meaning an oversupply of natural gas paired with a plummeting need for the commodity.

If El Nino collapses, on the other hand, it could result in a much colder winter, driving demand for gas up as inventory levels drop. If these colder temperatures do emerge, Weissman has be quoted as projecting that short-term prices could settle in anywhere from $3.10 MMBtu to $3.40 MMBtu. If the warmer winter weather scenario unfolds, then short term prices could drop as low as $2.00 MMBtu.

In short, there is a potential to turn the natural gas market into a very volatile one this year, meaning it is more important than ever for commercial consumers to understand the opportunities that exist in today’s energy buying market.

Experts are encouraging businesses of all types to understand the impact that these upcoming weather changes could have on their business, so they can lock in the right products and prices now before the winter season unfolds. Planning ahead is one of the best ways for companies to minimize the risks for their business moving forward. Ultimately, the natural gas price predictions are still uncertain, and analysts are simply trying to prepare consumers about the potential outcomes of the current market, strictly for educational purposes, so today’s consumers can make the best choices possible to fit their individual needs.

Original story appeared on GDF SUEZ’s website.

The post El Nino Weather Pattern May Create New Buying Opportunities for Commercial Clients appeared first on Eisenbach Consulting.