Energy Wiz: Watching the Electricity Markets
Where retail electricity pricing is open to competition (mainly Texas, New England, and the mid-Atlantic states), it pays to know what’s going on. Several free e-mailed newsletters may help you catch the next price ‘wave.’
Just When You Least Expect ItThis year (2007) saw, two big dips in power pricing: January and July, neither of which was typical. A spell of unusually warm winter weather and no hurricane damage to Gulf wells (Mexico instead took the hits), created two opportunities to secure cheaper (by 10% to 20%, depending on market) forward power. Many large power users took advantage by buying all (or a portion) of their electricity beyond when their contracts would expire, thereby locking in the prices before they rose again (as they eventually did).
In a few cases, energetic power marketers or consultants notified them about the trend, but most retail power customers didn’t hear about the opportunities until it was either too late or until a power supplier got around to snail mailing an offering. The second dip fortunately lasted into the early fall, but there’s never a guarantee the next one will stick around for a while. A better way is to keep an eye on wholesale price trends through one of several free e-mailed newsletters offered by a few marketers and consultants. Since retail prices typically move in lock step with wholesale pricing, an $.XX/kWh change in the latter is usually seen to the same degree in the former.
Credible SourcesA variety of e-mailed newsletters report on natural gas pricing, such as Realgy’s Natural Gas Report on NYMEX Futures (which may also be found at nymex.com), but only a few do so for electricity. Most of those cover a variety of wholesale market issues as well as pricing, and few are free: many cost over $1,000 a year, and are designed for traders, marketers, and consultants rather than endusers.
A few others, however, cover retail power pricing issues and cost nothing. While the information they offer varies considerably, it’s hard to beat ‘free.’ Note that some have regional editions, publication may be irregular, and most are three to four pages long.
- Suez Energy’s“Weekly Market Monitor” (www.suezenergyresources.com) offers twelve-month, one-month, and one-week trending charts of wholesale power pricing for the New England, New York, PJM, and Texas markets, and provides details on some sub-markets within them (e.g., zones). NYMEX natural gas pricing, gas in storage, and a 6 to 10 day NOAA weather forecast for continental U.S. are also featured. Each issue includes a short article written at the customer (not trader) level, on a basic subject such as heat rate, load factor, etc.
- Constellation NewEnergy’s“energy market IQ”(www.newenergy.com), appears monthly, and its eastern edition covers mostly New England, New York, and PJM. Its medium-length articles range from oil pricing, renewables, and other issues beyond commodity electricity. Like the Suez offering, it shows a weather forecast (but regionally, not nationally), NYMEX natural gas price trends, and PJM long-term trends (looking backward several years). It also, however provides 10-day forward power pricing for some zones by the Intercontinental Exchange (ICE), which is a competitor to the NYMEX.
- Strategic Energy’s “Energy Outlook” (www.sel.com) just started (September 2007) as an e-mail and covers buying strategies, legislative issues, and other news.
- Direct Energy’s ‘“Marketwise” (www.directenergy.com) is published on a weekly basis. It focuses more on natural gas than power, but includes handy links to several Energy Information Administration (a division of the DOE) sites that provide national energy data. It also excerpts opinions found in some wholesale trade outlets.
- World Energy Solutions “Market Edge” provides its weekly with an eye toward other consultants and large endusers having some knowledge of markets and their lingo. It covers, in roughly equal doses, the PJM electricity market, NYMEX natural gas, and crude oil markets, while including the usual weather forecast. l
- Hess Corporation’s “Daily, Weekly, and Monthly Energy Updates” (www.hessenergy.com) provide equal or greater detail than other newsletters; and many feel they are the best free source of such information. The Daily covers only natural gas and oil, but the Weekly and Monthly also cover electricity for many zones in the New England, New York, and PJM grids. Hess’s Weekly goes a step beyond other newsletters by providing retail power pricing (exclusive of margin and taxes) for a typical customer with a 60% load factor. Such data has been a handy benchmark when comparing price bids from other retail power providers. ES