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Sunday, 11 July 2021 14:12

I HAVE NOT HEARD OF ANY POWER OUTAGES DUE TO WEATHER THIS WEEK. NATURAL GAS FUTURES BOTH SHORT TERM AND LONG TERM CONTINUE THEIR UPWARD TRAJECTORY, AS DOES POWER. RATE-LOCKING POWER AND GAS REMAINS THE BEST FORM OF CUSTOMER PROTECTION.

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Prompt month natural gas contract was flat for the week, and ended the trading week at $3.67 / MMBtu. The 12, 24, and 36-month contracts were also relatively unchanged settling the week at $3.47; $3.20; and $3.04 / MMBtu respectively.  The forward natural gas curve signifies a great time to lock in your retail power and gas prices for longer stretches of time.  Tight spreads between the short term and long-term natural gas contracts are compelling and continue to support the decision of locking your retail power and gas rates for longer stretches of time.  Allow your ESCO supply company to work for your business or residence, and manage market volatility with fixed price contracts for term length.  Variable rate contracts do not offer price protection (or value) in my own opinion.

New gas storage levels came out on July 8, 2021 for the week ending July 2, 2021.  The overall storage level ended the week at 2,564 / MMBtu, a weekly increase in the system of 16 MMBtu.  Natural gas storage levels are 6.9% below the 5-year average, and 17.6% below the levels seen 12 months ago.  Keep in mind that this is storage in the system.  There are still ample supplies of natural gas in the ground that has yet to be tapped by producers.

Variable rate plans are meant to be pegged to an index that are not necessary tied to the prompt month gas trading levels (keep these market movements in mind when evaluating comparable billing periods!). Wholesale based pricing products are leaving the ERCOT markets as many consumers and law makers saw these products as a contributor to the market chaos brought on by extreme weather conditions across Texas. While pass through components such as capacity and ancillary services costs have come up, the commodity itself remains in check.  As a customer, you have the choice to decide who holds the price volatility risk.  Protect yourselves with fixed price contracts.  Those customers who elect a variable rate plan are 100% exposed to price volatility driven by weather and other market conditions.  Allow your supply company to do their job and manage the volatility by offering you a fixed price contract.

It’s hot outside, real hot.  Cooling degree day averages are well above historical norms for the week, as well as the entire summer averages in the north east. Hot weather leads to increased HVAC usage and power demand which translates to market volatility.  Attractive opportunities are in the market for customers to hedge out price volatility.  Keep the risk where it belongs, with your well-seasoned energy supply partner.  This is not a risk that customers should be exposed to.

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