For week ending 8/23, natural gas continues its upward trend we have experienced for the past 2 weeks. No significant changes in weather and the weekly EEI gas storage report came in under estimates which usually translates in a short term uptick in the 12, 24, and 36 month forward strips. Summer volatility season has come to an end, although September historically has also seen some commodity price volatility driven by hot weather. The forward prices continue to stay in the $3.50 - $4.00 range, albeit at the higher end. As we begin to get into the more active months of hurricane season, risk of Atlantic storms increases, although commodity markets have proven to be less vulnerable to these storms than they have been in the past. Risk adverse customers should continue to look to lock their electricity rates in before the winter season. Variable or index customers have been somewhat fortunate with the lack of volatility in the wholesale energy markets this summer.
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Michigan electric rates continue to increase as the state lacks the price competition present under electric choice to discipline pricing.
Rates in all sectors are higher than they were one year ago, Energy Choice Now said.
"Over the last year, Michigan’s rates jumped 3.7 percent – far more than the rate of inflation, and more than double the regional average increase of just 1.5 percent. Meanwhile, rates in Illinois, a state that continued with competition when Michigan re-monopolized its electric system in 2008, dropped by 4.7 percent," Energy Choice Now said.
According to Energy Choice Now, Michigan’s overall electricity rates in May were 16 percent higher than the regional average. Industrial electric rates were 23 percent higher and commercial rates were 14.5 percent higher. Residential rates were 15.6 percent higher than their regional counterparts.
The latest numbers from the U.S. Energy Information Administration, which reflect data from May 2013, show that Michigan needs electric competition soon before it falls even further behind its neighboring states, said Wayne Kuipers, executive director of Energy Choice Now Michigan.
"Our business members tell us time and again that energy is one of their top three cost drivers – that electricity rates are paramount when companies are deciding whether to expand or contract, to create jobs or lay off workers," Kuipers said. "Because of Michigan’s electric monopoly, our businesses have to dig out of a hole from the very beginning. That’s not a business-friendly climate."